On January 1, 2018, Perry Company purchased 80% of Selby Company for $960,000. At that time Selby

Question:

On January 1, 2018, Perry Company purchased 80% of Selby Company for $960,000. At that time Selby had capital stock outstanding of $400,000 and retained earnings of $400,000. The fair value of Selby Company?s assets and liabilities is equal to their book value except for the following:

image

One-half of the inventory was sold in 2018; the remainder was sold in 2019. At the end of 2018, Perry Company had in its ending inventory $54,000 of merchandise it had purchased from Selby Company during the year. Selby Company sold the merchandise at 20% above cost. During 2019, Perry Company sold merchandise to Selby Company for $300,000 at a markup of 20% of the selling price. At December 31, 2019, Selby still had merchandise that it purchased from Perry Company for $78,000 in its inventory. Financial data for 2019 are presented here:

image

Required:

A. Prepare the consolidated statements workpaper for the year ended December 31, 2019.

B. Calculate consolidated retained earnings on December 31, 2019, using the analytical or t-account approach.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Advanced Accounting

ISBN: 978-1119373209

7th edition

Authors: Debra C. Jeter, Paul K. Chaney

Question Posted: