Pisa Company acquired 75 percent of Siena Company on January 1 20X3 for $712500. The fair value of

the noncontrolling interest was equal to 25 percent of book value. On the date of acquisition Siena had

common stock outstanding of $300000 and a balance in retained earnings of $650000. During 20X3

Siena purchased inventory for $35000 and sold it to Pisa for $50000. Of this amount Pisa reported

$20000 in ending inventory in 20X3 and later sold it in 20X4. In 20X4 Pisa sold inventory it had

purchased for $40000 to Siena for $60000. Siena sold $45000 of this inventory in 20X4.

Income and dividend information for Siena for 20X3 and 20X4 are as follows:

Net Income Dividends

20×3 150000 40000

20×4 200000 50000

Pisa Company uses the equity method.

Required:

a. Present the worksheet elimination entries necessary to prepare consolidated financial statements for 20X3.

b. Present the worksheet elimination entries necessary to prepare consolidated financial statements for 20X4.

Please show every step used to calculate answers.