Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Anything will help! Pea Corporation acquired 80 percent of Split Brewing Companys stock on January 1, 20X1, at underlying book value. At that date, the

Anything will help!

Pea Corporation acquired 80 percent of Split Brewing Companys stock on January 1, 20X1, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of Splits book value. On January 1, 20X1, Split issued $306,000 par value, 8 percent, 10-year bonds to Malt Company. Pea subsequently purchased $106,000 of the bonds from Malt for $118,000 on January 1, 20X3. Interest is paid semiannually on January 1 and July 1. Assume Pea Corporation uses the fully adjusted equity method.

Summarized balance sheets for Pea and Split as of December 31, 20X4, follow:

PEA CORPORATION
Balance Sheet
December 31, 20X4
Cash and Receivables $ 137,500 Accounts Payable $ 99,000
Inventory 216,000 Bonds Payable 385,000
Buildings and Equipment (net) 322,000 Common Stock 180,000
Investment in Split Company: Retained Earnings 294,600
Bonds 107,500
Stock 175,600
Total Assets $ 958,600 Total Liabilities and Owners Equity $ 958,600
SPLIT BREWING COMPANY
Balance Sheet
December 31, 20X4
Cash and Receivables $ 139,000 Accounts Payable $ 83,000
Inventory 166,000 Bonds Payable 306,000
Buildings and Equipment (net) 362,000 Bond Premium 48,000
Common Stock 80,000
Retained Earnings 150,000
Total Assets $ 667,000 Total Liabilities and Owners Equity $ 667,000

At December 31, 20X4, Split holds $42,000 of inventory purchased from Pea, and Pea holds $26,000 of inventory purchased from Split. Split and Pea sell at cost plus markups of 30 percent and 40 percent, respectively. Assume total sales from Pea to Split were $133,000 and from Split to Pea were $117,000.

Required:

Prepare all consolidation entries needed on December 31, 20X4, to complete a consolidated balance sheet worksheet. Assume Split earned $80,000 and paid $15,000 in dividends during the year.

Prepare a consolidated balance sheet worksheet.

Prepare a consolidated balance sheet in good form.

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

Modern Auditing

Authors: Graham Cosserat

2nd Edition

0470863226, 978-0470863220

More Books

Students also viewed these Accounting questions

Question

Sell the quality of your brand or products.

Answered: 1 week ago