Trial balance data for Light Corporation and Star Company on December 31, 20X5, are as follows:

Light acquired all of Star's shares on January 1, 20X5, for $220,000. The full differential is assigned to goodwill. At December 31, 20X5, the management of Light reviewed the amount attributed to goodwill and concluded goodwill had been impaired and should be reported at $8,000. Light uses the cost method in accounting for its investment in Star.

Required

Present all eliminating entries needed to prepare consolidated financial statements for the year 20X5, and prepare a three-part consolidation workpaper in good form as of December 31, 20X5.

Transcribed Image Text:

Item Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Taxes Payable Common Stock Retained Earnings, January 1 Sales Dividend Income Item Cash Accounts Receivable Inventory Buildings and Equipment Investment in Star Company (at cost) Cost of Goods Sold Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Taxes Payable Common Stock Retained Earnings, January 1 Sales Dividend Income Light Corporation Debit Credit 25,000 23,000 20,000 Light Corporation Debit Credit $ 46,000 55,000 75,000 300,000 $105,000 40,000 70,000 220,000 270,000 200,000 230,000 300,000 10,000 $955,000 $955,000 $490,000 $490,000 25,000 21,000 20,000 Star Company Debit 20,000 25,000 10,000 Debit Credit Star Company $ 30,000 40,000 65,000 240,000 $ 65,000 20,000 55,000 150,000 50,000 150,000 135,000 20,000 10,000 20,000 Credit $ 130,000 20,000 50,000 200,000 262,000 350,000 20,000 $1,032,000 $1,032,000 $560,000 $560,000 $ 85,000 30,000 35,000 150,000 60,000 200,000