Egret Corporation paid $24,800 for an 80 interest in Plume Corporation on January 1, 2004, at which time Plume s stockholders equity consisted of $15,000 of Common Stock and $6,000 of Retained Earnings The fair values of Plume Corporation s assets and liabilities were identical to recorded book values when Egret acquired its 80 interest Plume Corporation reported net income of $4,000 and paid dividends of $2,000 during 2004 Egret Corporation sold inventory items to Plume during 2004 and 2005 as follows 2004 2005 Egret s sales to Plume $ 5,000 $ 6,000 Egret s cost of sales to Plume 3,000 3,500 Unrealized profit at year end 1,000 1,500 The accounts payable of Plume include $1,500 owed to Egret for inventory purchases Required Financial statements of Egret and Plume appear in the first two columns of the partially completed working papers Complete the consolidation working papers for Egret Corporation and Subsidiary for the year ended December 31, 2005 Problem 1 (in thousands) INCOME STATEMENT Sales Income from Plume Cost of sales Operating expense Noncontrolling int share Net income RETAINED EARNINGS Retained earnings Egret Retained earnings Plume Net income Dividends Retained earnings end BALANCE SHEET Cash Accounts Receivable net Dividends Receivable Inventories Equipment and Buildings net Investment in Plume stock Goodwill Total assets Accounts payable Dividends Payable Other debt Common stock Retained earnings Total equities Noncontrolling interest Egret CORPORATION AND SUBSIDIARY CONSOLIDATION WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 2005 80 Adjustments Eliminations Egret Plume Debits Credits Consolidated 43,000 20,000 6,700 (22,000) (8,000) (12,200) (3,000) 15,500 9,000 10,000 8,000 15,500 9,000 (10,000) (5,000) 15,500 12,000 5,400 3,000 15000 10,000 2,000 18,000 8,000 24,000 31,000 28,100 92,500 52,000 17,500 12,500 7,000 2,500 12,500 10,000 40,000 15,000 15,500 12,000 92,500 52,000

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Egret Corporation paid $24,800 for an 80% interest in Plume Corporation on January 1, 2004, at which time Plume?s stockholders? equity consisted of $15,000 of

Egret Corporation paid $24,800 for an 80% interest in Plume Corporation on January 1, 2004, at which time Plume?s stockholders? equity consisted of $15,000 of Common Stock and $6,000 of Retained Earnings. The fair values of Plume Corporation?s assets and liabilities were identical to recorded book values when Egret acquired its 80% interest. Plume Corporation reported net income of $4,000 and paid dividends of $2,000 during 2004. Egret Corporation sold inventory items to Plume during 2004 and 2005 as follows: 2004 2005 Egret?s sales to Plume $ 5,000 $ 6,000 Egret?s cost of sales to Plume 3,000 3,500 Unrealized profit at year-end 1,000 1,500 The accounts payable of Plume include $1,500 owed to Egret for inventory purchases. Required: Financial statements of Egret and Plume appear in the first two columns of the partially completed working papers. Complete the consolidation working papers for Egret Corporation and Subsidiary for the year ended December 31, 2005. image text in transcribed

Problem # 1 (in thousands) INCOME STATEMENT Sales Income from Plume Cost of sales Operating expense Noncontrolling int. share Net income RETAINED EARNINGS Retained earnings - Egret Retained earnings - Plume Net income Dividends Retained earnings - end BALANCE SHEET Cash Accounts Receivable - net Dividends Receivable Inventories Equipment and Buildings - net Investment in Plume stock Goodwill Total assets Accounts payable Dividends Payable Other debt Common stock Retained earnings Total equities Noncontrolling interest | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Egret CORPORATION AND SUBSIDIARY CONSOLIDATION WORKSHEET FOR THE YEAR ENDED DECEMBER 31, 2005 | 80% | Adjustments & Eliminations | Egret | Plume | Debits Credits | Consolidated | | 43,000 | 20,000 | 6,700 | | (22,000) | (8,000) | | | (12,200) | (3,000) | | | 15,500 | 9,000 | | | 10,000 | | | 8,000 | 15,500 | 9,000 | (10,000) | (5,000) | | | 15,500 | 12,000 | | | 5,400 | 3,000 | 15000 | 10,000 | 2,000 | | 18,000 | 8,000 | 24,000 | 31,000 | 28,100 | | | | | | 92,500 | 52,000 | 17,500 | 12,500 | 7,000 | 2,500 | 12,500 | 10,000 | 40,000 | 15,000 | 15,500 | 12,000 | 92,500 | 52,000 | | |