Question - Pappy, Inc. acquired a 60 percent interest in the common stock of Sammy, for $372,000 on January 1, 2015. Sammy's book value on that date consisted of common stock of $100,000 and retained earnings of $220,000. Sammy held patents (10-year remaining life) that were undervalued within the company's accounting records by $70,000 and an unrecorded customer list (15-year remaining life) assessed at a $45,000 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Pappy uses the equity method. At year end, Sammy owed Pappy $20,000.

In the course of ordinary business, Pappy sells inventory to Sammy. In 2015, Pappy sold $150,000 to Sammy. This inventory had an original cost of $120,000. At December 31, 2015, the ending balance (at the transfer price) in Sammy's ending inventory was $50,000. In 2016, Pappy sold $160,000 to Sammy. This inventory cost Pappy $112,000 and $40,000 at the transfer price remained unsold at the end of 2016.

In addition, during 2016, Pappy sold land to Sammy for $100,000 with an original cost of $80,000.

The individual financial statements for these two companies as of December 31, 2016, and the year then ended follow:

Required: Prepare the elimination entries and consolidation worksheet.