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James Company and Subsidiary Craft Company Worksheet for Consolidated Financial Statements For Year Ended December 31, 20X6 Eliminations Consolidated Controlling Consol. Trial Balance and Adjustments Income Retained Balance Sheet James Craft Or. Cr. Statement NCI Earnings Inventory, December 31 .. .... 100,000 90,000 () Other Current Assets... 126,000 110,000 Investment in Craft Company 2 CCC 50,000 80,000 Buildings and Equipment.... 350,000 390,000 () Accumulated Depreciation.... (100,000) (70,000) Goodwill........... C Other Intangibles ..... 20,000 Current Liabilities.. ... 120,000) (60,000) Bonds Payable....." ..... (388,300) (140,000) Other Long-Term Liabilities ... ... (200,000) (200,000) Other Paid-In Capital in Excess of Par -James ...... (100,000) Retained Earnings-James ..............." (210,500) Common Stock-Craft. .............." (50,000) Other Paid-In Capital in Excess of Par -Craft..." (200,000) Retained Earnings-Craft..................." (120,000) NCI (NCI) ..1414140 Net Sales ................ (520,000) (500,000) Cost of Goods Sold ... ..... 300,000 250,000 () Operating Expenses...... .... 120,000 200,000 Subsidiary Income ..... 2 Dividends Declared ..... .... 40,000 20,000 Purchased Income ..... Total ....."' Consolidated Net Income............."" To NCI (see distribution schedule)..................""' To Controlling Interest (see distribution schedule)...... Retained Earnings-Controlling Interest, December 31, 20X2.. Totals .........Problem 7-2 (LO 2) Worksheet, blocks, control with rst block, merchandise sales. On January 1, 20X5, James Company purchases 60% of the common stock of Craft Company for $420,000. On this date, Craft has common stock, other paid-in capital in excess of par, and retained earnings of $50,000, $200,000, and $60,000, respectively. On May 1, 20X6, James Company purchases an additional 20% of the common stock of Craft Company for $300,000. Net income and dividends for two years for Craft Company are as follows: 20x5 _20X6 Net Income for the year $100,000 $50,000 Dividends, declared in December 40,000=20.,@ 1n 20X6, the net income of Craft from January 1 through April 30 is $30,000. On January 1, 20215, the only tangible asset of Craft thatis undervalued is equipment, which is worth $60,000 more than book value. The equipment has a remaining life of five years, and straight-line depreciation is used. Any remaining excess is goodwill. 1n the last quarter of 20X6, Craft sells $100,000 in goods to James, ata gross profit rate of 40%. On December 31, 20x2, $20,000 of these goods are in James's ending inventory. The trial balances for the companies on December 31, 20X6, are as follows: James Company carries its Investment in Grey? Chmpany under the sophisticated equity method. Accordingly, it has recorded a journal entry on May 1, 20X6 to account for any adjustment in its Imesmem in er (Iompmy account as a result of James Company purchasing an additional 20% of the common stock of Craft Company for $300,000. REQUIRED 1. Prepare all elimination entries in general journal form. 2. Prepare a consolidation worksheet at 121311916 by (a) posting properly prepared elimination entries to the worksheet and (b) appropriately deriving the CONSOLIDATION BALANCE SHEET column
