On the Date of the Business Combination of Passman Corporation

Essay

On the date of the business combination of Passman Corporation and Slago Company, the following working paper elimination was prepared (in journal entry format):
Additional Information
1. On January 31, 2005, the remaining economic life of Slago's plant assets was 10 years, and Slago includes straight-line depreciation in operating expenses.
2. Goodwill was unimpaired on January 31, 2006.
3. Slago declared a dividend of $20,000 to Passman on December 27, 2005, and paid the dividend on January 17, 2006. Slago had a net income of $90,000 for the fiscal year ended January 31, 2006.
a. Prepare journal entries for Passman Corporation to record the operating results of Slago Company for the year ended January 31, 2006, under the equity method of accounting. Omit explanations and disregard income taxes.
b. Prepare a working paper elimination (in journal entry format) for Passman Corporation and subsidiary on January 31, 2006. Omit explanation and disregard income taxes.