Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

4. PROBLEM 3-6 In-Transit Items LO 8 On July 31, 2019, Ping Company purchased 90% of Santos Company's common stock for $2,010,000 cash. Immediately after

image text in transcribed
image text in transcribed
4. PROBLEM 3-6 In-Transit Items LO 8 On July 31, 2019, Ping Company purchased 90% of Santos Company's common stock for $2,010,000 cash. Immediately after the acquisition, the two companies' balance sheets were as follows: Ping Santos Cash $ 320,000 $ 150,000 Accounts receivable 600,000 300,000 Note receivable 100.000 -0 Inventory 1.840,000 400,000 Advance to Santos Company 60,000 -O- Investment in Santos Company 2,010,000 -O Plant and equipment (net) 3,000,000 1,500,000 Land 90.000 90,000 Total $8,020,000 $2,440,000 Accounts payable $ 800,000 $ 140,000 Notes payable 900,000 100,000 Common stock 2,400,000 900.000 Other contributed capital 2,200,000 680,000 Retained earnings 1.720,000 620,000 Total $8,020,000 $2.440,000 Santos Company has not yet recorded the $60.000 cash advance from Ping Company Ping Company's accounts receivable include $20,000 due from Santos Company Santos Company's $100,000 note payable is payable to Ping Company Neither company has recorded $7,000 of interest accrued on the note from January 1 to July 31 Any difference between book value and the value implied by the purchase price relates to land Required: Prepare a consolidated balance sheet workpaper on July 31, 2019 (a) To establish reciprocity for cash advances (b) To adjust for unrecorded interest expense and interest payable (c) To adjust for unrecorded interest income and interest receivable. (1) To eliminate intercompany advances (2) To eliminate intercompany accounts receivable and accounts payable (3) To eliminate investment in Santos Company and create noncontrolling interest account (4) To eliminate intercompany interest receivable and interest payable (5) To eliminate intercompany note receivable and note payable (6) To allocate the difference between implied and book value to land

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Accounting A User Perspective

Authors: Suadagaran, Shahrokh M, Smith Lawrence Murphy

5th Edition

1531018661, 9781531018665

More Books

Students also viewed these Accounting questions