Consolidation Matthews Co. obtained ninety percent of the common stock of Jackson Co. on January 1, 2016. As of that date, Jackson had the following balances, and fair values, on some of its accounts: Cost Fair value Additional paid-in capital 60,000 Buildings – net (10 year remaining useful life) 140,000 188,000 Common stock 300,000 Equipment – net (8 year remaining useful life) 240,000 216,000 Inventory 110,000 130,000 Land 90,000 120,000 Long-term liabilities (mature 12/31/2018) 180,000 160,000 Patent (10 year remaining useful life ) 0 72,000 During 2017 (2016), Jackson reported net income of $132,000 ($96,000) while paying dividends of $36,000 ($12,000). The retained earnings were $300,000 at the end of 2017. Matthews Co. acquired the common stock of Jackson Co. for $585,000 in cash and incurred legal and accounting fees of $40,000 in respect of the merger.
Matthews uses the equity method to account for this investment.
Required: Prepare the consolidation journal entries for December 31, 2017.