Question
Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2021: Gibson Davis Sales $ (758,000 ) $ (381,500
Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2021:
Gibson | Davis | ||||||
Sales | $ | (758,000 | ) | $ | (381,500 | ) | |
Cost of goods sold | 372,000 | 148,000 | |||||
Operating expenses | 252,000 | 63,500 | |||||
Dividend income | (18,000 | ) | 0 | ||||
Net income | $ | (152,000 | ) | $ | (170,000 | ) | |
Retained earnings, 1/1/21 | $ | (708,000 | ) | $ | (447,000 | ) | |
Net income | (152,000 | ) | (170,000 | ) | |||
Dividends declared | 80,000 | 30,000 | |||||
Retained earnings, 12/31/21 | $ | (780,000 | ) | $ | (587,000 | ) | |
Cash and receivables | $ | 42,300 | $ | 70,000 | |||
Inventory | 568,000 | 225,000 | |||||
Investment in Davis | 566,700 | 0 | |||||
Buildings (net) | 596,000 | 690,000 | |||||
Equipment (net) | 483,000 | 456,000 | |||||
Total assets | $ | 2,256,000 | $ | 1,441,000 | |||
Liabilities | $ | (846,000 | ) | $ | (514,000 | ) | |
Common stock | (630,000 | ) | (340,000 | ) | |||
Retained earnings, 12/31/21 | (780,000 | ) | (587,000 | ) | |||
Total liabilities and stockholders' equity | $ | (2,256,000 | ) | $ | (1,441,000 | ) | |
Gibson acquired 60 percent of Davis on April 1, 2021, for $566,700. On that date, equipment owned by Davis (with a five-year remaining life) was overvalued by $45,000. Also on that date, the fair value of the 40 percent noncontrolling interest was $377,800. Davis earned income evenly during the year but declared the $30,000 dividend on November 1, 2021.
Prepare a consolidated income statement for the year ending December 31, 2021.
Determine the consolidated balance for each of the following accounts as of December 31, 2021:
- Goodwill
- Equipment (net)
- Common stock
- Buildings (net)
- Dividends declared
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