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Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20x2, for $112,700. At that date, the noncontrolling interest had a fair value of $48,300 and Soda reported $71,000 of common stock outstanding and retained earnings of $31,000. The differential is assigned to buildings and equipment, which had a fair value $28,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $31,000 higher than book value and a remaining life of five years at the date ofthe business combination. Trial balances for the companies as of December 31, 20x3, are as follows: Pop Corporation Soda Company Item Debit Credit Debit Credit Cash & Accounts Receivable $ 16,400 $ 22,600 Inventory 166,000 36,000 Land 81,000 41,000 Buildings & Equipment 350,000 261,000 Investment in Soda Company 117,200 Cost of Goods Sold 187,000 80,800 Depreciation Expense 20,000 15,000 Interest Expense 17,000 6,200 Dividends Declared 31,000 16,000 Accumulated Depreciation $141,000 $ 85,000 Accounts Payable 93,400 36,000 Bonds Payable 219,250 94,000 Bond Premium 1.600 Common Stock 121,000 71,000 Retained Earnings 128,900 61,000 Sales 261,000 130,000 Other Income 10,600 Income from Soda Company 10,450 $985,600 $985,600 $478,600 $478,600 On December 31, 20X2, Soda purchased inventory for $31,500 and sold it to Pop for $45,000. Pop resold $30,000 of the inventory (i.e., $30,000 ofthe $45,000 acquired from Soda) during 20X3 and had the remaining balance in inventory at December 31, 20X3. During 20x3, Soda sold inventory purchased for $56,000 to Pop for $80,000, and Pop resold all but $25,000 of its purchase. On March 10, 20x3, Pop sold inventory purchased for $15,000 to Soda for $30,000. Soda sold all but $7,800 of the inventory prior to December 31, 20X3. Assume Pop uses the fully adjusted equity method, that both companies use straight-line depreciation, and that no property, plant, and equipment has been purchased since the acquisition. Required: a. Prepare all consolidation entries needed to prepare a full set of consolidated financial statements at December 31, 20x3, for Pop and Soda. (If no entry is required for a transaction/event, select "No journal entry required" in the rst account eld.) 6 Answer is complete but not entirely correct. A Common stock a 71,000 a Retained earnings 0 61,000 a Income from Soda Company 9 10.450 0 NCI in NI of Soda Company 9 0 o Dividends declared 9 16,000 9 Investment in Soda Company 9 117,200 0 NCI in NAof Soda Company 9 0 o B 2 Amortization expense 0 Depreciation expense 9 Income from Soda Company 0 10,450 0 NCI in NI of Soda Company 0 0 o C 3 Buildings and equipment 9 Patents 9 Accumulated depreciation 9 85,000 0 Investment in Soda Company 9 0 0 NCI in NAof Soda Company 9 0 o D 4 Accumulated depreciation 9 Buildings and equipment a 261,000 0 E Investment in Soda Company 0 0 0 NCI in NA of Soda Company a 0 0 Cost of goods sold a 80.800 0 F 6 Investment in Soda Company 9 NCI in NA of Soda Company 9 Inventory 9 36,000 0 G 7 Sales 9 130,000 0 Cost of goods sold 0 80,800 0 Inventory 0 36,000 0 b. Prepare a three-part consolidation worksheet for 20x3. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required. combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) Q Answer is complete but not entirely correct. Income Statement Sales 6 261,000 0 $ 130,000 0 $ 134,000 9 $ 257,000 Other Income 10,600 Less: COGS (80,800) 0 130,100 9 (137,700) Less: Depreciation Expense (15,000) 0 2,900 6 (37,900) Less: Interest Expense (6,200) 0 (23,200) Less: Amortization Expense 7,600 6 (7,600) Income from Soda Company 16,295 6 7,350 6 1,505 Consolidated Net Income 28,000 160,795 137,450 62,705 NCI in Net Income 8,805 6 3,150 6 (5,655) Controlling Interest in Net Income 28,000 $ 169,600 $ 140,600 $ 57,050 Statement of Retained Earnings Beginning balance 3 128,900 0 $ 61,000 0 $ 61,000 0 $ 128,900 Net income 58,050 28,000 169,600 140,600 57,050 Less: Dividends declared (31.000) 0 (16,000) 0 16,000 0 (31,000) Ending Balance 5 155,950 73,000 $ 230,600 $ 156,600 $ 154,950 Balance Sheet Cash and Accounts Receivable 22,600 a $ 39,000 Inventory 36,000 0 20,700 9 181,300 Land 41,000 0 122,000 Buildings & Equipment 261,000 0 29,000 0 45,000 9 595,000 Less: Accumulated Depreciation (141 ,000) 0 (85,000) 9 45,000 6 5,800 9 (186,800) Investment in Soda Company 117,000 6 11,760 6 128,995 6 (235) Patents 22,800 6 22,300 Total Assets 589,400 275,600 $ 108,560 $ 200,495 $ 773,065 Accounts Payable $ 93,400 0 $ 36,000 0 $ 129,400 Bonds Payable 219,250 0 94,000 0 313,250 Bonds Premium 1,600 a 1,600 Common Stock 121,000 0 71,000 0 71,000 0 121,000 Retained Earnings 155,950 73,000 230,600 156,600 154,950 NCI in NAof Soda Company 5,040 6 57,105 6 52,065 Total Liabilities & Equity $ 589,600 $ 275,600 $ 306,640 $ 213,705 $ 772,265