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1. On January 1, 20X3, Pope Company acquired 100% of the common stock of Siegel Company for $300,000. On this date Siegel had total owners'

1. On January 1, 20X3, Pope Company acquired 100% of the common stock of Siegel Company for $300,000. On this date Siegel had total owners' equity of $250,000. Any excess of cost over book value is attributable to goodwill. Pope accounts for its investment in Siegel using the simple equity method.

On July 1, 20X3, Siegel Company sold to outside investors $300,000 par value of 10-year, 10% bonds. The price received was equal to par. The bonds pay interest semi-annually on July 1 and January 1.

During early 20X4, market interest rates on bonds similar to those issued by Siegel decreased to 8%. As a result, the market value of the bonds increased. On July 1, 20X4, Pope purchased $150,000 par value of Siegel's bonds, paying $163,000. Pope still holds the bonds on December 31, 20X4 and has amortized the premium, using the straight-line method.

Required:

Complete the Figure 5-1 worksheet for consolidated financial statements for the year ended December 31, 20X4. Round all computations to the nearest dollar.

Figure 5-1

Trial Balance

Eliminations and

Pope

Siegel

Adjustments

Account Titles

Company

Company

Debit

Credit

Interest Receivable

7,500

Other Current Assets

157,212

371,000

Investment in Sub. Company

410,000

Investment in Sub. Bonds

162,278

Land

50,000

30,000

Buildings and Equipment

350,000

380,000

Rent Receivable

(100,000)

(50,000)

Goodwill

Interest Payable

(15,000)

Other Current Liabilities

(120,000)

(56,000)

Bonds Payable, 10%

(300,000)

Other Long-Term Liabilities

(200,000)

Common Stock

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