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Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2021: Sales Gibson $ Davis (768,000) $ (381,000)
Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2021: Sales Gibson $ Davis (768,000) $ (381,000) 380,000 Cost of goods sold 204,000 Operating expenses 182,000 69,000 Dividend income (24,000) 0 Net income $ (230,000) $ (108,000) Retained earnings, 1/1/21 $ (761,000) $ (451,000) Net income (230,000) (108,000) Dividends declared 50,000 40,000 Retained earnings, 12/31/21 $ (941,000) $ (519,000) Cash and receivables $ 245,400 $ 72,000 Inventory 582,000 220,000 Investment in Davis 552,600. 0 Buildings (net) 598,000 640,000 Equipment (net) Total assets. Liabilities 443,000 495,000 $ 2,421,000 $ 1,427,000 $ (850,000) $ (568,000) Common stock (630,000) (340,000) Retained earnings, 12/31/21 Total liabilities and stockholders' equity (941,000) $(2,421,000) (519,000) $ (1,427,000) Gibson acquired 60 percent of Davis on April 1, 2021, for $552,600. On that date, equipment owned by Davis (with a five-year remaining life) was overvalued by $78,000. Also on that date, the fair value of the 40 percent noncontrolling interest was $368,400. Davis earned income evenly during the year but declared the $40,000 dividend on November 1, 2021. a. Prepare a consolidated income statement for the year ending December 31, 2021. b. Determine the consolidated balance for each of the following accounts as of December 31, 2021:
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