From the 12th edition not the 11th edition

Problem 4-14 (LO 2, 3) 80%, equity, several excess distributions, inventory, fixed assets, parent and subsidiary sales.

Refer to the preceding facts for Purples acquisition of Salmon common stock. On January 1, 2017, Salmon held merchandise sold to it from Purple for $12,000. This beginning inventory had an applicable gross profit of 35%. During 2017, Purple sold merchandise to Salmon for $55,000. On December 31, 2017, Salmon held $10,000 of this merchandise in its inventory. This ending inventory had an applicable gross profit of 40%. Salmon owed Purple $7,500 on December 31 as a result of this intercompany sale.

Purple held $16,000 worth of merchandise in its January 1, 2017, inventory from sales from Salmon. This beginning inventory had an applicable gross profit of 30%. During 2017, Salmon sold merchandise to Purple for $35,000. Purple held $20,000 of this inventory at the end of the year. This ending inventory had an applicable gross profit of 35%. Purple owed Salmon $5,000 on December 31 as a result of this intercompany sale.

On January 1, 2015, Purple sold equipment to Salmon at a profit of $40,000. Depreciation on this equipment is computed over an 8-year life using the straight-line method.

On January 1, 2016, Salmon sold equipment with a book value of $30,000 to Purple for $54,000. This equipment has a 6-year life and is depreciated using the straight-line method. Purple and Salmon had the following trial balances on December 31, 2017:

	Purple Company	Salmon Company
Cash	195,400	53,500
Accounts Receivable	140,000	53,000
Inventory	140,000	81,000
Land	100,000	60,000
Investment in Salmon Company	443,600
Buildings	800,000	150,000
Accumulated Depreciation	(280,000)	(65,000)
Equipment	150,000	220,000
Accumulated Depreciation	(115,000)	(103,000)
Goodwill		40, 000
Accounts Payable	(25,000)	(50,000)
Bonds Payable		(100,000)
Common Stock	(100,000)	(10,000)
Paid-In Capital in Excess of Par	(800,000)	(90,000)
Retained Earnings, January 1, 2017	(510,000)	(169,500)
Sales	(850,000)	(500,000)
Cost of Goods Sold	480,000	290,000
Depreciation ExpenseBuildings	30,000	5,000
Depreciation ExpenseEquipment	15,000	23,000
Other Expenses	210,000	94,000
Interest Expense		8,000
Subsidiary Income	(64,000)
Dividends Declared	40,000	10,000
Totals	0	0

Required

1. Prepare a value analysis and a determination and distribution of excess schedule for the investment in Salmon.

2. Complete a consolidated worksheet for Purple Company and its subsidiary Salmon Company as of December 31, 2017. Prepare supporting amortization and income distribution schedules.