How do you complete the consolidation entries for the purchase of Jefferson? Cost 1,000,000 BV 750,000 Equipment 50,000 Goodwill 200,000

Do you Debit Retained earnings, equip, goodwill and capital stock?

3. (20 pts) Using the information from Problem 2 and assuming the beginning of year 3 Investment in account has a balance of $1,152,000, complete the consolidation worksheet below. To aid in this, the information for Problem 2 is repeated below. Washington Company purchased 100% of Jefferson Company on January 1, 20x1 for $1,000,000 when the book value of Jefferson was $750,000 with the excess caused by Equipment that was undervalued by $50,000 and Goodwill. The Equipment had a four year life. in 20x2 Washington sold inventory to Jefferson still in the inventory of Jefferson at year end with a profit of $3,000. During 20X3, Washington sold to Jefferson inventory costing $30,000 for $40,000. At December 31, 20x3, Jefferson still had $6,000 cost to Jefferson of that inventory in its inventory. The income statements and balance sheets for the two companies for 20x3 are shown below: Cr Consolidated Washington Jefferson Dr. 300,000 100,000 Sales Cost of Goods Sold 60,000 240,000 40,000 40.000 60,000 10,000 Expenses Income from S Total income 50,000 Begin. RE Dividends End. RE 800,000 20,000 730,000 10,000 770,000 Cash Receivables Inventory Propety/Equipment Accumulated Depr Patents Goodwill 100,000 70,000 50,000 500,000 -100,000 0 100,000 100,000 50,000 900,000 -100,000 50,000 psLock S. d d D investment in 1,100,000 Liabilities Capital Stock Retained Earnings 282,000 500,000 130,000 200,000 770,000 1,100,000