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can you help me with this question please... lexpense 6 Parent Purchases Subsidiary Bonds On December 31, 2013, Ken AO acquired 80 percent of Nuro
can you help me with this question please...
lexpense 6 Parent Purchases Subsidiary Bonds On December 31, 2013, Ken AO acquired 80 percent of Nuro AO for $8,000,000 when the total share of Nuro lders' equity of Nuro AO was $10,000,000. Below is the trial balance information of both companies for the year ended December 31, 2014 Debits Nuro AO Ken AO Cash Accounts receivable Interest receivable Inventory Land Equipment-net Building-net Investment in Nuro AO bonds Investment in Nuro AO Cost of sales Interest expense Other expenses Dividends $ 2,000 1,500 $3,640 $ 1,900 $ 0 $1,800 $ 4,200 $ 1,100 $ 2,000 S 0 $ 0 $8,800 $ 200 $ 2,100 $ 800 $ 24,900 $ 1,600 2,000 $ 2,100 $6,000 $ 8,000 $ 11,100 $ 0 $ 1,700 $ 500 $38,550 Total Credits Accounts payable Interest payable 10 percent bonds payable Common stock Retained Earnings Sales Gain on sale of building Interest income $900 $ 100 $ 900 $ 5,000 $ 5,000 $ 12,000 $ 1000 $ 0 $2,400 $ 0 S10,000 $ 12,000 $ 14,000 $ 0 $ 150 $ 38,550 Total ADDITIONAL INFORMATION 1. During 2014, Nuro AO sold inventory to Ken AO for $1,000,000 with gross profit of 20 percent. Half of this inventory remained at Ken AO. 2. On July 1, 2014, Ken A0 purchased building from Nuro AO by paying $5,000,000 cash. The building had useful life of 10 years. Ken AO depreciated the building using straight-line method. Right before the sale, Nuro AO recorded the building on its book for $4,000,000. 3. On January 1, 2014, Nuro AO had $1,000,000 par of 10 percent bonds with unamortized discount of $200,000. These bonds will mature on January 1, 2016. The bonds pay interest every January 1. At this date, Ken AO purchased all of Nuro AO's bonds with price of $900,000. REQUIRED: Prepare a consolidation workpapers for Ken AO and subsidiary for the year ended December 31, 2014Step by Step Solution
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