ACCT 400 Midterm Examination (10 points) S Corporation acquired a 90 percent interest in Sa Corporation on January 1, 2011, for $270,000, at which times 's capital stock and retained eamings were $150,000 and $90,000, respectively. The fair value/book value differential is goodwill. Financial statements for P and S.for 2012 are as follows (in thousands): P Combined Income and Retained Earnings Statement for the Year Ended December 31, 2012 Sales $190 Income from Gain on land Cost of sales Operating expenses (40 Net income Add: Retained earnings January 1 Less: Dividends (150) Retained earnings, December 31 Balance Sheet at December 31, 2012 Cash Accounts receivable Dividends receivable Inventories Land Buildings--net Machinery-net Investment in s ***3923 22-399332321 { | I || | | Accounts payable Dividends payable Other liabilities Capital stock Retained earnings Additional information: 1. P sold inventory items to Sfor $60,000 during 2011 and $72,000 during 2012. S's inventories at December 31 2011 and 2012 included unrealized profits of $10,000 and $12,000 respectively 2. On July 1, 2011, P sold equipment with a book value of $28,000 to S for $35,000. The equipment had a useful life of 3.5 years at the time of the same, and straight-line depreciation is use. 3. During 2012, P sold land with a book value of $15,000 to 5 for $20,000. 4. P's accounts receivable on Dec. 31 2012 includes $10,000 due from S 5. P uses the equity method for its investment in S Required: Prepare eliminating working paper entries on Dec. 31, 2012 (the seven steps). ACCT 400 Midterm Examination (10 points) S Corporation acquired a 90 percent interest in Sa Corporation on January 1, 2011, for $270,000, at which times 's capital stock and retained eamings were $150,000 and $90,000, respectively. The fair value/book value differential is goodwill. Financial statements for P and S.for 2012 are as follows (in thousands): P Combined Income and Retained Earnings Statement for the Year Ended December 31, 2012 Sales $190 Income from Gain on land Cost of sales Operating expenses (40 Net income Add: Retained earnings January 1 Less: Dividends (150) Retained earnings, December 31 Balance Sheet at December 31, 2012 Cash Accounts receivable Dividends receivable Inventories Land Buildings--net Machinery-net Investment in s ***3923 22-399332321 { | I || | | Accounts payable Dividends payable Other liabilities Capital stock Retained earnings Additional information: 1. P sold inventory items to Sfor $60,000 during 2011 and $72,000 during 2012. S's inventories at December 31 2011 and 2012 included unrealized profits of $10,000 and $12,000 respectively 2. On July 1, 2011, P sold equipment with a book value of $28,000 to S for $35,000. The equipment had a useful life of 3.5 years at the time of the same, and straight-line depreciation is use. 3. During 2012, P sold land with a book value of $15,000 to 5 for $20,000. 4. P's accounts receivable on Dec. 31 2012 includes $10,000 due from S 5. P uses the equity method for its investment in S Required: Prepare eliminating working paper entries on Dec. 31, 2012 (the seven steps)
