Reference no: EM132771935

Question - On January 1, 2014, Paterson Company purchased 60% of the common stock of Smith Company for $540,000. At that time, Smith's stockholders' equity consisted of $70,000 of Common stock, $190,000 of other contributed capital, and $240,000 of Retained earnings. Any difference between implied and book value relates to Smith's land. Paterson uses the cost method to record its investment in Smith. Its fiscal year ends on December 31.

Additional information for both companies for 2020 follows:

	Paterson	Smith
Common stock	$300,000	$70,000
Other contributed capital	520,000	190,000
Retained Earnings, 1/1/2020	940,000	370,000
Net Income for 2020	262,000	89,000
Dividends declared in 2020	40,000	21,000

Required -

(a) Make all the necessary eliminating entries on a consolidated statements workpaper on 12/31/2020.

(b) Calculate the consolidated net income for 2020.