Playlink Corporation Acquired the Voting Stock of Squaredeal Company on January

Essay

Playlink Corporation acquired the voting stock of Squaredeal Company on January 1, 2019 for $10,000 in cash. Squaredeal's book value was $3,700 at the date of acquisition, comprised of the following accounts:
$$\begin{array}{l}\begin{array} { l r } & \text { Dr } ( \mathrm { Cr } ) \\\hline \text { Capital stock } & \$ ( 2,500 ) \\\text { Retained earnings, beginning } & ( 1,300 ) \\\text { Accumulated other comprehensive loss } & 100 \\\text { Total } & \underline { \$ ( 3,700 ) }\end{array}\\\\\text { The } \$ 6,300 \text { excess of acquisition cost over book value was allocated as follows: }\end{array}$$

It is now December 31, 2021, three years since the acquisition. Playlink uses the complete equity method to account for its Investment in Squaredeal on its own books. Squaredeal's trial balance at December 31, 2021 is as follows:
$\begin{array}{lc}&\text { Dr (Cr) }\\\hline \text { Cash, receivables. } &\$ 600 \\ \text { Inventory. } & 1,400 \\ \text { Plant \& equipment, net . } & 8,400 \\ \text { Liabilities. } & \{1,425\} \\\text { Capital stock. } & \{2,500\} \\ \text { Retained earnings, beginning . } & \{5,000\} \\ \text { Accumulated other comprehensive income, beg. ... } & \{150\} \\ \text { Dividends. } & 200 \\ \text { Sales revenue. } & \{15,000\} \\ \text { Cost of goods sold. } & 12,000 \\ \text { Operating expenses. } & 1,500 \\\text { Other comprehensive income. } & \{25\} \\\text { Total} &\$ 0 \\\end{array}$ Required
a. Calculate 2021 equity in net income of Squaredeal, appearing in Playlink's December 31, 2021 trial balance.
b. Prepare a schedule calculating Playlink's December 31, 2021 Investment in Squaredeal balance.
c. Prepare the eliminating entries necessary to consolidate the trial balances of Playlink and Squaredeal at December 31, 2021.