c. Prepare a consolidated balance sheet. (Amounts to be deducted should be entered with a minus sign.)
Pretzel Corporation acquired 100 percent of Stick Company's outstanding shares on January 1, 20x7. Balance sheet data for the two companies immediately after the purchase follow: Cash Accounts Receivable Inventory Buildings & Equipment Less: Accumulated Depreciation Investment in Stick Company Investment in Stick Company Bonds Total Assets Pretzel Stick Corporation Company $ 70,000 $ 35,000 90,000 65,000 84,000 80,000 400,000 300,000 (160,000) (75,000) 305,000 50,000 $ 839,000 $405,000 $ 50,000 200,000 300,000 Accounts Payable Bonds Payable Common Stock Capital in Excess of Par Retained Earnings Total Liabilities & Equities $ 20,000 100,000 150,000 140,000 (5,000) $405,000 289,000 $ 839,000 As indicated in the parent company balance sheet, Pretzel purchased $50,000 of Stick's bonds from the subsidiary at par value immediately after it acquired the stock. An analysis of intercompany receivables and payables also indicates that the subsidiary owes the parent $10,000. On the date of combination, the book values and fair values of Stick's assets and liabilities were the same. As indicated in the parent company balance sheet, Pretzel purchased $50,000 of Stick's bonds from the subsidiary at par value immediately after it acquired the stock. An analysis of intercompany receivables and payables also indicates that the subsidiary owes the parent $10,000. On the date of combination, the book values and fair values of Stick's assets and liabilities were the same. Required: a. Prepare all consolidation entries needed to prepare a consolidated balance sheet for January 1, 20x7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Event Accounts Credit 1 Debit 150,000 140,000 Common stock Paid-in capital in excess of par Retained earnings Investment in Stick Company 5,000 285,000 B 2 50,000 Bonds payable Investment in Stick Company 50,000 3 50,000 Bonds payable Investment in Stick Company Bonds 50,000 D D 4 10,000 Accounts payable Accounts receivable 10,000 E 5 75,000 Accumulated depreciation Buildings and equipment 75,000 b. Complete a consolidated balance sheet worksheet. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting 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.) Stick Co. DR CR Consolidated Corp. Assets Cash Accounts receivable Inventory Buildings and equipment Less: Accumulated depreciation Investment in Stick Company Investment in Stick Company bonds Goodwill Total Assets GA 0 0 0 $ 0 $ 0 $ 0 Liabilities & Stockholders' Equity Accounts payable Bonds payable Common stock Capital in excess of par Retained earnings Total Liabilities & Equity 0 0 0 0 0 $ 0 $ PRETZEL CORPORATION AND SUBSIDIARY Consolidated Balance Sheet January 1, 20X7 Assets Cash Accounts receivable Inventory Buildings and equipment Accumulated depreciation Goodwill Total Assets $ 0 0 Liabilities & Stockholders' Equity Accounts payable Notes payable Common stock Retained earnings Total Liabilities & Stockholders' Equity 0
