1. On January 1, 2016, Parent Company acquired 100% of the common stock of Subsidiary Company for $750,000. On this date Subsidiary had total owners' equity of $540,000.

Any excess of cost over book value is attributable to land, undervalued $10,000, and to goodwill.

During 2016 and 2017, Parent has appropriately accounted for its investment in Subsidiary using the simple equity method.

On January 1, 2017, Parent held merchandise acquired from Subsidiary for $10,000. During 2017, Subsidiary sold merchandise to Parent for $100,000, of which $20,000 is held by Parent on December 31, 2017. Subsidiary's usual gross profit on affiliated sales is 40%.

On December 31, 2017, Parent still owes Subsidiary $20,000 for merchandise acquired in December.

Required: Using the information in the paragraphs above and the trial balance information in the worksheet below prepare journal entries only ( DO NOT COMPLETE THE WORKSHEET) for eliminating current equity ( E), determination and distribution ( D), CY1, CY2, IS, IA, BI, EI. Please show all calculations for the most points.

Figure 4-3
	Trial Balance		Eliminations and
	Parent	Sub.	Adjustments
Account Titles	Company	Company	Debit		Credit
Inventory, December 31	100,000	80,000
Other Current Assets	139,000	450,000
Investment in Sub. Company	880,000
Other Long-Term Investments	50,000	30,000
Land	140,000	70,000
Buildings and Equipment	315,000	400,000
Accumulated Depreciation	(280,000)	(110,000)
Other Intangibles	60,000
Current Liabilities	(150,000)	(100,000)
Bonds Payable	(100,000)
Premium on Bonds Payable	(5,000)
Other Long-Term Liabilities	(200,000)	(150,000)
Common Stock P Co.	(200,000)
Other Paid in Capital P Co.	(100,000)
Retained Earnings P Co.	(479,000)
Common Stock S Co.		(100,000)
Other Paid in Capital S Co.		(200,000)
Retained Earnings S Co.		(300,000)
Net Sales	(600,000)	(380,000)
Cost of Goods Sold	350,000	180,000
Operating Expenses	140,000	100,000
Subsidiary Income	(100,000)
Gain on Sale of Equipment	(20,000)
Dividends Declared P Co.	60,000
Dividends Declared S Co.		30,000
Consolidated Net Income
NCI
Controlling Interest
Total NCI
Ret. Earn. Contr. Int. 12-31
	0	0

	Consol.		Control.	Consol.
	Income		Retained	Balance
Account Titles	Statement	NCI	Earnings	Sheet
Inventory, December 31
Other Current Assets
Investment in Sub. Company
Other Long-Term Investments
Land
Buildings and Equipment
Accumulated Depreciation
Other Intangibles
Current Liabilities
Bonds Payable
Premium on Bonds Payable
Other Long-Term Liabilities
Common Stock P Co.
Other Paid in Capital P Co.
Retained Earnings P Co.
Common Stock S Co.
Other Paid in Capital S Co.
Retained Earnings S Co.
Net Sales
Cost of Goods Sold
Operating Expenses
Subsidiary Income
Gain on Sale of Equipment
Dividends Declared P Co.
Dividends Declared S Co.
Consolidated Net Income
NCI
Controlling Interest
Total NCI
Ret. Earn. Contr. Int. 12-31

1. On January 1, 2016, Parent Company acquired 100% of the common stock of Subsidiary Company for $750,000. On this date Subsidiary had total owners' equity of $540,000.

Any excess of cost over book value is attributable to land, undervalued $10,000, and to goodwill.

During 2016 and 2017, Parent has appropriately accounted for its investment in Subsidiary using the simple equity method.

On January 1, 2017, Parent held merchandise acquired from Subsidiary for $10,000. During 2017, Subsidiary sold merchandise to Parent for $100,000, of which $20,000 is held by Parent on December 31, 2017. Subsidiary's usual gross profit on affiliated sales is 40%.

On December 31, 2017, Parent still owes Subsidiary $20,000 for merchandise acquired in December.

Required: Using the information in the paragraphs above and the trial balance information in the worksheet below prepare journal entries only ( DO NOT COMPLETE THE WORKSHEET) for eliminating current equity ( E), determination and distribution ( D), CY1, CY2, IS, IA, BI, EI. Please show all calculations for the most points.

Figure 4-3
	Trial Balance		Eliminations and
	Parent	Sub.	Adjustments
Account Titles	Company	Company	Debit		Credit
Inventory, December 31	100,000	80,000
Other Current Assets	139,000	450,000
Investment in Sub. Company	880,000
Other Long-Term Investments	50,000	30,000
Land	140,000	70,000
Buildings and Equipment	315,000	400,000
Accumulated Depreciation	(280,000)	(110,000)
Other Intangibles	60,000
Current Liabilities	(150,000)	(100,000)
Bonds Payable	(100,000)
Premium on Bonds Payable	(5,000)
Other Long-Term Liabilities	(200,000)	(150,000)
Common Stock P Co.	(200,000)
Other Paid in Capital P Co.	(100,000)
Retained Earnings P Co.	(479,000)
Common Stock S Co.		(100,000)
Other Paid in Capital S Co.		(200,000)
Retained Earnings S Co.		(300,000)
Net Sales	(600,000)	(380,000)
Cost of Goods Sold	350,000	180,000
Operating Expenses	140,000	100,000
Subsidiary Income	(100,000)
Gain on Sale of Equipment	(20,000)
Dividends Declared P Co.	60,000
Dividends Declared S Co.		30,000
Consolidated Net Income
NCI
Controlling Interest
Total NCI
Ret. Earn. Contr. Int. 12-31
	0	0

	Consol.		Control.	Consol.
	Income		Retained	Balance
Account Titles	Statement	NCI	Earnings	Sheet
Inventory, December 31
Other Current Assets
Investment in Sub. Company
Other Long-Term Investments
Land
Buildings and Equipment
Accumulated Depreciation
Other Intangibles
Current Liabilities
Bonds Payable
Premium on Bonds Payable
Other Long-Term Liabilities
Common Stock P Co.
Other Paid in Capital P Co.
Retained Earnings P Co.
Common Stock S Co.
Other Paid in Capital S Co.
Retained Earnings S Co.
Net Sales
Cost of Goods Sold
Operating Expenses
Subsidiary Income
Gain on Sale of Equipment
Dividends Declared P Co.
Dividends Declared S Co.
Consolidated Net Income
NCI
Controlling Interest
Total NCI
Ret. Earn. Contr. Int. 12-31