Midyear Purchase of Controlling Interest LO 10-29 Page 542 Stage Company operates on a calendar-year basis, reporting its results of operations quarterly. For the first quarter of 20X1, Stage reported sales of $240,000 and operating expenses of $180,000 and paid dividends of $10,000. On April 1, 20X1, Parachute Theaters Inc. acquired 85 percent of Stage's common stock for $765,000. At that date, the fair value of the noncontrolling interest was $135,000, and Stage had 100,000 outstanding shares of $1 par common stock, originally issued at $6 per share. The differential is related to goodwill. On December 31, 20X1, the management of Parachute Theaters reviewed the amount attributed to goodwill as a result of its purchase of Stage common stock and concluded that goodwill was not impaired. Stage's retained earnings statement for the full year 20X1 appears as follows: Retained Earnings, January 1, 20X1 $150,000 Net Income 175,000 Dividends (40,000) Retained Earnings, December 31, 20X1 $285,000 Parachute Theaters accounts for its investment in Stage using the equity method. Required
a. Present all entries that Parachute Theaters would have recorded in accounting for its investment in Stage during 20X1.
b. Present all consolidation entries needed in a worksheet to prepare a complete set of consolidated financial statements for the year 20X1.