I need help figuring out where I went wrong in my answer (excel sheet).
Pepper Company, which is a calendar-year-reporting company, purchased 65% of the common stock of Salt Company, on December 31, 2019, for 20,000 shares of common stock of Pepper Company. On the acquisition date, Pepper Company shares had a par value of $5 per share and a market value of $17.25 per share. The total price paid for Salt Company shares represents 65% of the total fair value of Salt Company. On the acquisition date, the following net assets of Salt had fair values different than book value: Cost FMV Inventory 80,000 95,000 Turnover = 4 times per year Land 70,000 115,000 Buildings and equipment, net 150,000 215,000 20 year life Patent 81,000 9 year life Bonds payable 150,000 125,000 10 years to maturity During the year ending December 31, 2020, there were no transactions involving the stock of Salt Company. Required: a. Prepare the journal entries made by Pepper Co. to reflect the acquisition of Salt on 12/31/19 and the application of the equity method of accounting during the year ending 12/31/20. b. Complete the Illustration #5a Worksheet" to show the consolidation on 12/31/20. Consolidation Entries Debit Credit Salt Co. Consolidated Illustration #5a Consolidation Date 12/31/20 Income Statement 2020 Sales Cost of sales Depreciation expense Interest expense Other expenses Income from Salt Pepper Co. (1,250,000) 520,000 30,000 7,000 (550,000) 370,000 32,000 15,000 203,000 15,000 3,250 2,500 9,000 (1,800,000) 905,000 65,250 24,500 550,000 338,000 64,838 NCI in net income Net (Income) Loss (64,838) (34,912) (99,750) (34,912) (290,162) (290, 162) 70,000 29,750 Statement of Retained Earnings Balances, beginning 1/1/20 Net (Income) Loss Dividends declared Balances, 12/31/20 29,750 (350,000) (290,162) 80,000 (560,162) 50,000 70,000 22,000 142,000 (50,000) (99,750) ( (22,000) (171,750) (350,000) (290,162) 80,000 (560,162) 29,750 Balance Sheet as of 12/31/20 140,000 70,000 145,000 268,000 165,300 260,000 Cash Accounts receivable Inventory Investment in Salt Land Buildings and equipment Accumulated depreciation Patent Bargain purchase Total Assets 128,000 95,300 115,000 265,862 100,000 651,000 (110,000) (15,000) (299,500) 100,000 320,000 (115,000) 15,000 33,638 45,000 65,000 83,000 81,000 (3,250) (9,000) (41,000) (367,750) 245,000 1,036,000 (145,250) 72,000 (41,000) 1,860,050 1,245,162 660,000 322,638 (447,000) (2,500) Payables and accruals Bonds payable Common stock Additional-paid-in capital Retained earnings / deficit NCI in net assets Total Liab. and Equity (65,000) (20,000) (200,000) (400,000) (560,162) (150,000) (45,000) (160,000) 142,000 25,000 45,000 160,000 29,750 18,113 277,863 (512,000) (147,500) (200,000) (400,000) (560,162) (127,137) (1,946,799) (171,750) (145,250) (319,500) (1,245,162) (660,000) 65% 35% 100% 224,250 Shares 120,750 Price 345,000 20,000 17.25 345000 20,000 Shares 5 Par 100000 Acquisition Date 1/1/20 Purchase price NCI Total Implied Value of Salt Bookvalue: Common Stock Additional paid-in-capital Retained earnings FMV>
