Consolidation Worksheet: Equity Method Parrco and Subbco Consolidation Worksheet as of December 31, 2006

(Subbco's fourth year of operations)

CONSOLIDATION ENTRIES PARRCO SUBBCO DR. CR. CONSOLIDATED Income Statement Sales . 600,000 Cost of sales . (360,000)

Expenses

.

. (190,000)

,000 Net Income . ,000 Statement of Retained Earnings Balances, 1/1/06 . ,000

+ Net income . ,000

- Dividends declared . (40,000)

Balances, 12/31/06 . ,000 Balance Sheet Cash . 60,000 Accounts receivable . 70,000 Interco. dividend rec . 10,000 Inventory . 110,000 Investment in Subbco . ,000 Land . 220,000 Buildings and equipment . 500,000 Accumulated depreciation . (320,000)

Total Assets . ,000 Payables and accruals . 230,000 Interco. dividend pay .

Long-term debt . 150,000 Common stock, no par . 200,000 Common stock, $1 par .

Additional paid-in capital .

Retained earnings . ,000 Total Liabilities & Equity . ,000 Proof of debit and credit postings 240,000

(110,000)

(100,000)

840,000

(470,000)

(290,000)

,000 30,000

,000

,000 30,000

,000

(10,000)

,000 15,000 ,000 75,000 37,000 107,000

,000 55,000 165,000

,000 36,000 256,000 150,000 650,000

(13,000) (333,000)

280,000

,000 ,000 20,000 250,000 10,000

,000 80,000 230,000 200,000 5,000

,000 55,000

,000 110,000

,000 280,000

,000 ,000 ,000

,000 ,000 Explanation of entries:

Required Complete the worksheet assuming that the parent uses the equity method.