Company P acquired 80% of the outstanding common stock of Company S on 1 January 2014. The acquisition price included a $40,000 control premium. On the date of acquisition, an equipment was undervalued in the books of Company S. The equipment has a remaining useful life of 8 years. Also, on the date of acquisition, the retained earnings of Company S were $370,000. The remaining excess fair value was attributed to Goodwill. Company P accounted for the investment using the equity method.

Between 1 January 2014 and 31 December 2018, the Investment in Company S account has increased by $155,468. Company S did not issue any new common stock during the period 2014-2018.

On 1 January 2018, Company P reported $400,000 in bonds outstanding with a book value of $410,125. These bonds carry a coupon rate of 10%. Company S purchased half of these bonds on the open market for $202,000.

During 2018, Company P sold to Company S merchandise inventory costing $200,000 at a price of $350,000. All but $20,000 of these goods were resold to outside parties by the end of 2018. Company S still owed $80,000 for inventory shipped from Company P during December.

Company P has 500,000 common stock(shares) outstanding by the end of 2018.

Ignore tax rate.

The following is selected financial statements for Company P and Company S at 31 December 2018. Account	Company P ($)	Company S ($)
Revenues	894,600	652,400
Cost of Goods Sold	483,000	277,200
Operating Expenses	187,600	225,400
Interest Expense -Bonds	36,910	NA
Interest Income -Bond Investment	NA	18,180
Equity in Company S Income	??	NA
Net Income	??	??
R/E @ 1 January 2018	307,200	505,400
Dividends Paid	217,000	87,170
RE @ 31 December 2018	??	??
Cash & Receivables	186,200	111,200
Inventory	239,400	121,800
Investment in Company S	715,468	NA
Investment in Company P Bonds	NA	??
Land, Buildings, & Equipment(net)	483,335	695,430
Accounts Payable	389,194	232,400
Bonds Payable	400,000	140,000
Premium on Bonds Payable	??	NA
Common Stock	420,000	170,000

 

Requirement

Using a worksheet format ,prepare the consolidated financial statements for year 2018.(show all of your calculations).