MetaConsolidation Subsequent to Consolidation with Intercompany Transactions

Premium$-$Low Cost $($Premium$)$ has had a successful couple of years since it acquired Soup Inc. $($Soup$).$ Both companies have been growing, and Premium has been purchasing inventory from Soup to sell in its retail locations. It is now December $31,2021$ and Premium needs to prepare its consolidated financial statements for the year ended December $31,2021.$

Premium$-$Low Cost $($Premium$)$ continues to grow and look for ways to expand. It's investment in Super turned out to be a bad one, so Premium disposed of its investment in Super in $2018.$ With the cash from the sale, Premium decided to try making a different investment. Jan and Colton figured that Premium could grow and save money by investing in a staple food producer, Soup Inc. Therefore, Premium purchased $80\%$ of Soup Inc. on January $1,2019$ for $$1\mathrm{.}2$ million.

Note $-$ you will need much of the information you used to prepare the consolidated financial statements at December $31,2020($assignment #$2)$ to complete this assignment. Information from homework #$2$ has been included in the next tab entitled 'Information from homework $2\text{'}$ for your convenience.

Other information:

During $2021,$ dividend declarations amounted to $$70,000$ by Premium and $$40,000$ by Soup.

There was no impairment of goodwill in $2021.$

The note payable issued by Soup in $2020$ was repaid by Premium on July $1,2021.$ Total interest for $2021$ was $$10,000$ which was paid in full upon retirement of the loan.

During $2021,$ Soup had sales of $$150,000$ to Premium, and earned a gross margin of $45\%$ on the sales. At December $31,2021,20\%$ of this inventory had been sold to a customers but the remainder was still on hand.

During $2021,$ Premium provided some management services to Soup. As a result, Premium charged Soup $$35,000$ in management fees, which remained unpaid and outstanding at the end of $2021.$

It is now the end of $2021$ and consolidated financial statements must be prepared.

$$SFPs

At December $31,2021$

Premium Corp. Soup Inc.

Assets:

Cash $$50,000$ $$75,000$

Accounts and other receivables $60,00095,000$

Inventory $2,96,0001,50,000$

Buildings and equipment $19,36,00012,55,000$

Accumulated amortization $-$ buildings and equipment $(8,20,000)(5,45,000)$

Land $3,80,000$

Investment in Soup $12,00,000$

Other investments $70,00030,000$

$$27,92,000$ $$14,40,000$

Liabilities and equities:

Accounts payable $75,0001,70,000$

Notes payable $2,50,0004,00,000$

Common shares $18,00,0001,50,000$

Retained earnings $6,67,0007,20,000$

$$27,92,000$ $$14,40,000$

SCI

For the year ended December $31,2021$

Premium Corp. Soup Inc.

Sales and other income $$18,20,000$ $$11,20,000$

Dividend income $32,000$

$$18,52,000$ $$11,20,000$

Cost of sales $11,40,0007,65,000$

Amortization expense $85,00055,000$

Other expenses $2,25,00065,000$

Income tax expense $85,00050,000$

$15,35,0009,35,000$

Net Income and Comprehensive income $$3,17,000$ $$1,85,000$

required

Metab. Prepare all elimination entries necessary for Premium to consolidate Soup at December $31,2021.$ Ensure you show your work and calculations in the cells to the right of the entries.

Metac. Calculate the requested consolidated balances at December $31,2021($as itemized in the student worksheet tab$).$