How did they calculate the investment in soda company of 7350 and cost of goods sold as 10500?

1/23/2019 Assignment Print View 2. Award: 25 out of 25.00 points You did not receive full credit for this question in a previous attempt Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $119,000. At that date, the noncontrolling interest had a fair value of $51,000 and Soda reported $70,000 of common stock outstanding and retained earnings of $33,000. The differential is assigned to buildings and equipment, which had a fair value $29,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $38,000 higher than book value and a remaining life of five years at the date of the 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 $ 18,400 $ 24,600 Inventory 168,000 38,000 Land 83,000 43,000 Buildings & Equipment $70,000 263,000 Investment in Soda Company 117,235 Cost of Goods Sold 189,000 B2,800 Depreciation Expense 20,000 15,000 Interest Expense 19,000 8,200 Dividends Declared 33,000 8,000 Accumulated Depreciation $ 143,000 $ 75.000 Accounts Payable 95,40 38.000 Bonds Payable 240,790 10,000 Bond Premium 1.600 Common Stock 123,000 70,000 Retained Earnings 130,900 63.000 Sales 263,000 135,000 Other Income 12,600 Income from Soda Company 8,945 $1,017,635 $1,017,635 $492,600 $492.600 On December 31, 20X2, Soda purchased inventory for $31,200 and sold it to Pop for $48,000. Pop resold $30,000 of the inventory (i.e., $30,000 of the $48,000 acquired from Soda) during 20X3 and had the remaining balance in inventory at December 31, 20X3. During 20X3, Soda sold inventory purchased for $65,000 to Pop for $100,000, and Pop resold all but $29,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $17,000 to Soda for $34,000. Soda sold all but $8,500 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 first account field.) http://ezto.mheducation.com/hm.tpx?todo=c15SinglePrintView&singleQuestionNo=2.&postSubmissionView=13252710254035908&wid=13252710521... 2/91/23/2019 Assignment Print View No Entry Accounts Debit Credit Common stock 70,000 Retained earnings 63,000 Income from Soda Company 16,295 - NCI in NI of Soda Company 8,805 Dividends declared 18,000 Investment in Soda Company 96,795 NCI in NA of Soda Company 43,305 B 2 Amortization expense 7,600 Depreciation expense 2,900 Income from Soda Company 7,350 NCI in NI of Soda Company 3,150 C 3 Buildings and equipment 29,000 Patents 22,800 Accumulated depreciation 5,800 Investment in Soda Company 32,200 NCI in NA of Soda Company 13,800 D 4 Accumulated depreciation 45,000 Buildings and equipment 45,000 E 5 Investment in Soda Company 7,350 NCI in NA of Soda Company 3,150 Cost of goods sold 10,500 F 6 Investment in Soda Company 4,410 NCI in NA of Soda Company 1,890 Inventory 6,300 G 7 Sales V 134,000 Cost of goods sold 119,600 Inventory 14,400 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 column of the worksheet.) amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit http://ezto.mheducation.com/hm.tpx?todo=c15SinglePrintView&singleQuestionNo=2.&postSubmissionView=13252710254035908&wid=13252710521... 3/91/23/2019 Assignment Print View POP CORPORATION & SUBSIDIARY Consolidated Financial Statement Worksheet For 20X3 Consolidation E Pop Corp. Soda Co. DR CR Consolidated Income Statement Sales $ 263,000 ~ $ 135,000 ~ $ 134,000 264,000 Other Income 12,600 ~ 12,600 Less: COGS (189,000) (82,800) 130,100 (141,700) Less: Depreciation Expense (20,000) (15,000) 2,900 (37,900) Less: Interest Expense (19,000) (8,200) (27,200) Less: Amortization Expense 7,600 (7,600) Income from Soda Company 8,945 16,295 7,350 Consolidated Net Income 56,545 29,000 160,795 137,450 62,200 NCI in Net Income 8,805 ~ 3,150 (5,655 Controlling Interest in Net Income 56,545 29.000 169,600 140,600 56,545 Statement of Retained Earnings Beginning balance 130,900 $ 63,000 S 63,000 130,900 Net income 56,545 29,000 169,600 140,600 56,545 Less: Dividends declared (33,000) 18,000) 18,000 33,000 Ending Balance 154,445 74,000 232,600 158,600 154,445 Balance Sheet Cash and Accounts Receivable 18,400 - $ 24.600 ~ 43,000 Inventory 168,000 38,000 20,700 185,300 Land 83,000 43,000 126,000 Buildings & Equipment 370,000 263,000 29,000 45,000 617,000 Less: Accumulated Depreciation (143,000) (75,000) 45,000 5,800 (178,800) Investment in Soda Company 117.235 ~ 11,760 ~ 128,995 - Patents 22,800 2,800 Total Assets $ 613,635 $ 293,600 S 108,560 $ 200,495 $ 815,300 Accounts Payable $ 95,400 ~ $ 38,000 133,400 Bonds Payable 240,790 ~ 110,000 350,790 Bonds Premium 1,600 1,600 Common Stock 123,000 70.000 70,000 123,000 Retained Earnings 154,445 74,000 232,600 158,600 154,445 NCI in NA of Soda Company 5,040 57,105 52,065 Total Liabilities & Equity $ 613,635 $ 293,600 S 307,640 $ 215,705 $ 815,300 References Consolidating Entries Learning Objective: 06-03 Prepare equity-method journal entries and consolidation entries for the consolidation of a subsidiary following downstream inventory transfers. Difficulty: 3 Hard Learning Objective: 06-04 Prepare equity-method journal entries and consolidation entries for the consolidation of a subsidiary following upstream inventory transfers. http:/ezto.mheducation.com/hm.tpx?todo=c15SinglePrintView&singleQuestionNo=2.&postSubmissionView=13252710254035908&wid=13252710521... 4/91/23/2019 Assignment Print View Income from Soda Company 7,350 Reverse of the deferred gross profit from upstream sales in 20X2. Income from Soda Company 7.105 Investment in Soda Company 7,105 Eliminate the deferred gross profit from upstream sales in 20X3. Book Value Calculations: NC Pop Corp. Common Retained 30% 70% Stock Eamings Beginning book value 639,900 $ 93,100 20,300 $70,000 $ 63,000 + Net Income 8,700 29,000 - Dividends (5,400) 12,600) (18,000) Ending book value $43,200 $100,800 $70,000 $ 74,000 Adjustment to Basic Consolidation Entry NCI Pop Corp. Net Income $ 8.700 + Reverse GP deferral (up) 3.150 $ 20,300 7,350 - Gross profit deferral (down) 4.250 - Gross profit deferral (up) (3,045) (7.105) Income to be eliminated $ 8,805 $ 16.295 Ending Book Value $43.200 $100,800 + Reverse GP deferral 3.150 7.350 Gross profit deferral (down) 4,250 - Gross profit deferral (up) (3,045) (7.105) Adjusted book value $43,305 $ 96,795 Excess Value (Differential) Calculations: NCI Pop Corp. Buildings and 30% 70% Equipment Patents + Acc. Depr. Beginning balance $16,950 639,550 $29,000 $30,400 $(2,900 Changes (3,150) (7,350) (7,600) (2,900) Ending balance $13,800 $32,200 $29,000 $22,800 $(5,800) 20X3 Downstream Transactions: Total Re-sold $25,500 + Ending Inventory Sales $34,000 $8,500 COGS 17,000 12,750 4,250 Gross Profit $17,000 $ 12,750 $4,250 Gross Profit % 50.00% 20X2 Upstream Transactions: Ending nventory Re-sold 20X2 20X3 Ending Inventory 20X3 Sales $48,000 $30,000 $18,000 COGS 31.200 19,500 11,700 Gross Profit $16,800 $10,500 $ 6,300 Gross Profit % 35.00% 20X3 Upstream Transactions: Total Re-sold + Ending Inventory Sales $100,000 $71,000 $29,000 COGS 65,000 46,150 18,850 Gross Profit $ 35,000 $24,850 $10,150 Gross Profit % 35.00% Investment in Soda Corporation Beg. Balance 120,890 70% Net Income 20,300 12,600 70% Dividends 7,350 Excess Val. Amort. 20X2 Reversal 7,350 11,355 Deferred GP Ending Balance 117,235 Reversal 7,350 96,795 Basic 20X2 Deferred GP 4,410 32,200 Excess Reclass. Income from Soda Corporation 20,300 70% Net Income Excess Val. Amort. 7,350 Deferred GP 11,355 7,350 20X2 Reversa 8,945 Ending Balance Basic 16,295 7,350 Excess Val. Amort. http://ezto.mheducation.com/hm.tpx?todo=c15SinglePrintView&singleQuestionNo=2.&postSubmissionView=13252710254035908&wid=13252710521... 8/9