Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

At year-end, there were no intra-entity receivables or payables. Required: Prepare a worksheet to consolidate the financial statements of these two companies. For accounts where

image text in transcribed
image text in transcribed
image text in transcribed
At year-end, there were no intra-entity receivables or payables. Required: Prepare a worksheet to consolidate the financial statements of these two companies. For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values. Padre, Incorporated, buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2024, for $736,480 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $920,600, although Sierra's book value was only $606,000. Also, several individual items on Slerra's financial records had fair values that differed from their book values as follows: For internal reporting purposes, Padre, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31,2024 , for both companies. At year-end, there were no intra-entity receivables or payables. \begin{tabular}{|c|c|c|c|c|c|c|} \hline \multirow{2}{*}{ Accounts } & \multirow{2}{*}{ Padre } & \multirow{2}{*}{ Slerra } & \multicolumn{2}{|c|}{ Consolidation Entries } & \multirow{2}{*}{\begin{tabular}{l} Noncontrolling \\ Interest \end{tabular}} & \multirow{2}{*}{\begin{tabular}{c} Consolidated \\ Totals \end{tabular}} \\ \hline & & & Debit & Credit & & \\ \hline Revenues & $(1,544,300) & $(620,500) & & & & \\ \hline Cost of goods sold & 796,000 & 449,000 & & & & \\ \hline Depreciation expense & 276,000 & 17,500 & & & & \\ \hline Amortization expense & 0 & 9,500 & & & & \\ \hline Interest expense & 47,500 & 7,500 & & & & \\ \hline Equity in income of Sierra & (107,200) & 0 & & & & \\ \hline Separate company net income & $(532,000) & $(137,000) & & & & \\ \hline \multicolumn{7}{|l|}{ Consolidated net income } \\ \hline \multicolumn{7}{|l|}{ Net income to noncontrolling interest } \\ \hline \multicolumn{7}{|l|}{ Net income to Padre Company } \\ \hline Retained eamings, 1/1/24 & $(1,482,500) & $(446,000) & & & & \\ \hline Net income & (532,000) & (137,000) & & & & \\ \hline Dividends declared & 260,000 & 65,000 & & & & \\ \hline Retained eamings, 12/31/24 & $(1,754,500) & $(518,000) & & & & \\ \hline Current assets & \$ 1,137,820 & $493,000 & & & & \\ \hline Investment in Sierfa & 791,680 & 0 & & & & \\ \hline Land & 361,000 & 67,000 & & & & \\ \hline Buildings and equipment (net) & 941,000 & 348,500 & & & & \\ \hline Copyright & 0 & 180,500 & & & & \\ \hline Total assets & $3,231,500 & $1,089,000 & & & ? & \\ \hline Accounts payable & $(232,000) & $(230,000) & & & & \\ \hline Notes payable & (495,000) & (181,000) & & & & \\ \hline \multicolumn{7}{|l|}{ Noncontrolling interest in Sierra 1/1 } \\ \hline Noncontrolling interest in Sierra 12/31 & & & & & 0 & \\ \hline Common stock & (300,000) & (100,000) & & & & \\ \hline Additional paid-in capital & (450,000) & (60,000) & & & & \\ \hline Retained earnings (above) & (1,754,500) & (518,000) & & & & \\ \hline Total liabilities and equities. & $(3,231,500) & $(1,089,000) & $ & $ & & \\ \hline \end{tabular}

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

Step: 3

blur-text-image

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

Swanson On Internal Auditing Raising The Bar

Authors: IT Governance Publishing

1st Edition

1849280673, 978-1849280679

More Books

Students also viewed these Accounting questions