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Problem 8-3 Pepka Company and Subsidiary Sheck Company Worksheet for Consolidated Financial Statements For Year Ended December 31, 20X4 Eliminations Consolidated Controlling Consolidated Trial Balance and Adjustments Income Retained Balance Pepka Sheck Dr. Cr. Statement NCI Earnings Sheet Cash ...":" 300,000 100,000 Accounts Receivable (net) 500,000 200,000 Inventory .. 700,000 480,000 Investment in Sheck Company..... (3) (2) Property, Plant, and Equipment. 2,600,000 1,000,000 (3) Accumulated Depreciation.. (1,000,000) (500,000) (3) Goodwill..... (3) Liabilities ...." (800,000) (300,000) Common Stock ($100 par)-Penka .............. (1,916,500) Paid-In Capital in Excess of Par-Pepka.... Retained Earnings-Peka.. (900,000) Common Stock ($10 par) Sheck........... (120,000) (3) Paid-In Capital in Excess of Par-Sheck ..... (300,000) Retained Earnings-Sheck ....... (500,000) (3) NCI (NCI) Sales ...... (2,000,000) (800,000) (1 ) Subsidiary Income ... Cost of Goods Sold.. 1,100,000 400,000 (1) Other Expenses... 600,000 250,000 Dividends Declared. 50,000 90,000 (2) Consolidated Net Income......."." To NCI (see distribution schedule ) ... To Controlling Interest (see distribution schedule).. Total NCI....... Retained Earnings-Controlling Interest, December 31, 20X4. Totals........I. Problem 8-3 (LO 2) Worksheet, subsidiary stock sale, intercompany merchandise. On January 1, 20x2, mmmpany acquires 90% of the outstanding common stock of 5% Company for $900,000. On January 1, 20x4, mmmpany issues 2,000 shares of common stock to the public at $10 per share. mmmpany does not purchase any of these shares. mmmpany accounts for its investment in mmmpany under the sophisticated equity method. Accordingly, it has recorded a journal entry on January 1, 20x4 to account for any adjustment in its Investment in M Company account as a result of mmmpany issuing 2,000 shares of common stock to the public at $10 per share. mmmpany has the following stockholders' equity at the end of 20K] and 20x3: December 31 20Xl 20x3 Common stock {510 par) $100,000 $100,000 30151-131 capital in excess of par 300,000 300,000 Retained earnings 400,000 500,000 Total stockholders' equity $800,000 $900,000 On the January 1, 20x2, acquisition date, ShephCompany's book values approximate fair values, except fora building that is undervalued by $100,000. The building has an estimated future life of 25 years. Any additional excess is attributed to goodwill. Trial balances of the two companies as of December 31, 20x4, are as follows: During 20x4, MCompany sells $ 100,000 of merchandise to mmmpany at a price that includes a 40% gross prot. This is their rst intercompany sale. $10,000 of the goods remains in Mending inventory. REQUIRED 1. Prepare all elimination entries in general journal form. 2. Prepare a consolidation worksheet at 121311101 by (a) posting properly prepared elimination entries to the worksheet and (b) appropriately deriving the CONSOLIDATION BALANCE ..... SHEETcplumn
