Company A acquired all the issued capital of Company B on 1 July 2018 for a cost of $1,300,000. The share capital and reserves of Company B on the date of acquisition are:

• Share capital $400 000
• Retained earnings $600 000 $1,000,000

Dividends of $80,000 paid by Company B come from profits earned since 1 July 2018

• It is considered that the assets of Company B are fairly stated at the date that Company A acquires its shares, except for Plant and equipment, which is undervalued by 180,000.
• Company A recognizes dividend income when it is declared by the investee.

Prepare journal entries and complete the worksheet below.

CompanyA Company B Dr Cr Consolidated S0 50 S0 S0 S0 Reconciliation of opening and closing retained earnings Profit before tax 250 230 50 80 Tax expense Profit after tax 150 200 Opening retained earnings 600 600 800 750 less Dividends declared 70 80 Closing retained earnings Statement of financial position 730 670 Shareholders' funds Retained earnings Share capital 730 650 400 400 Liabilities Accounts payable Dividends payable 1,1d00 90 80 70 1240 2,300 Assets Cash 130 170 Accounts receivable 50 130 Dividends receivable 80 0 Inventory Plant and equipme 180 200 nt 500 800 Investment in Company B 1,300 0 Goodwill 2,300 1,210 CompanyA Company B Dr Cr Consolidated S0 50 S0 S0 S0 Reconciliation of opening and closing retained earnings Profit before tax 250 230 50 80 Tax expense Profit after tax 150 200 Opening retained earnings 600 600 800 750 less Dividends declared 70 80 Closing retained earnings Statement of financial position 730 670 Shareholders' funds Retained earnings Share capital 730 650 400 400 Liabilities Accounts payable Dividends payable 1,1d00 90 80 70 1240 2,300 Assets Cash 130 170 Accounts receivable 50 130 Dividends receivable 80 0 Inventory Plant and equipme 180 200 nt 500 800 Investment in Company B 1,300 0 Goodwill 2,300 1,210