O January 1, 2013 Company P acquired 80% of the common Company S for $667,000 On January 1, 2013 the owners' equity Of Company S consisted of common stock of $500,000, paid-in capital of $100,000, and retained earninas of $100 000 on the books of Company S in the amount of $5, 000. With a 15 vear remaining useful life was undervalued on the books of Company S in the amount of $18,750 of Company S in the amount of $10,000 Inventory was undervalued Plant and equipment Land was undervalued on the books The income statement for 2019, the re tained earnings statement for 2019, and the balance sheet on December 31, 2019 for each company are presented below. Company S Company P 700,000 66,200 3,100 769,300 300,000 $ Sales Subsidiary Income Interest Income 300,000 $ Expenses: $140,000 21,000 40,000 19,000 $400, 000 150,700 75,000 Cost of Goods Sold Operations Depreciation 220,000 80,000 625,700 143,600 Interest Net Income 350,000 80,000 430,000 30,000 400,000 506,500 143,600 $ 650,100 40,000 $ $ Retained Earnings January 1 Net Income Dividends Declared $ 610,100 Retained Earnings December 31 $ 178,820 50,000 175,000 200,000 Cash 200,000 Receivables 300,000 33,000 888,180 1,000 , 000 400,000 $3,000,000 Inventory Investment in Bonds Investment in Company S Plant and Equipment (net) 625,000 150,000 $1,200,000 Land $ 139,900 Accounts Payable Bonds Payable Discount on Bonds Payable $ 56,000 150,000 (6,000) 500,000 100,000 400,000 $1,200,000 Common Stock 2,000,000 250,000 610,100 $3,000,000 Paid-in Capital Retained Earnings The following addi tional information is available: During 2019 Company P made sales of $50,000 to Company S at a gross margin ra te of 30%; $8,000 of the goods remain in the ending inventory of Company S. $20,000 to Company P at a gross margin rate of 35%; $2, 000 of the goods remain in the ending inven to ry of Company P inventory of Company S includes $10,000 of goods purchased from Company P in 2018 at a gross margin rate of 25% . inventory of Company P includes $5 , 000 of goods purchased from Company S in 2018 at a gross margin rate of 40% 1. During 2019 Company S made sales of The beginn ing The beginning On January 1, 2017 Company P sold equipment with a book value of 2. $20,000 to Company S for $26,000. remaining useful life. On January 1, 2016 Company Pacquired 20% of the 12% bonds of Company S for $35,000 when the bonds of Company S had a carrying value of $140 ,000 . companies use straight-line amortization The equipment has a 4 year 3. The bonds mature on January 1, 2026. Both Required: Prepare the necessary eliminations for the preparation of consolida ted financial statements on December 31, 2019. Prepare a computer spreadsheet for the preparation of a consolidated income statement, a consolidated retained earnings statement, and a consolidated balance sheet on December 31, 1. 2. 2019. O January 1, 2013 Company P acquired 80% of the common Company S for $667,000 On January 1, 2013 the owners' equity Of Company S consisted of common stock of $500,000, paid-in capital of $100,000, and retained earninas of $100 000 on the books of Company S in the amount of $5, 000. With a 15 vear remaining useful life was undervalued on the books of Company S in the amount of $18,750 of Company S in the amount of $10,000 Inventory was undervalued Plant and equipment Land was undervalued on the books The income statement for 2019, the re tained earnings statement for 2019, and the balance sheet on December 31, 2019 for each company are presented below. Company S Company P 700,000 66,200 3,100 769,300 300,000 $ Sales Subsidiary Income Interest Income 300,000 $ Expenses: $140,000 21,000 40,000 19,000 $400, 000 150,700 75,000 Cost of Goods Sold Operations Depreciation 220,000 80,000 625,700 143,600 Interest Net Income 350,000 80,000 430,000 30,000 400,000 506,500 143,600 $ 650,100 40,000 $ $ Retained Earnings January 1 Net Income Dividends Declared $ 610,100 Retained Earnings December 31 $ 178,820 50,000 175,000 200,000 Cash 200,000 Receivables 300,000 33,000 888,180 1,000 , 000 400,000 $3,000,000 Inventory Investment in Bonds Investment in Company S Plant and Equipment (net) 625,000 150,000 $1,200,000 Land $ 139,900 Accounts Payable Bonds Payable Discount on Bonds Payable $ 56,000 150,000 (6,000) 500,000 100,000 400,000 $1,200,000 Common Stock 2,000,000 250,000 610,100 $3,000,000 Paid-in Capital Retained Earnings The following addi tional information is available: During 2019 Company P made sales of $50,000 to Company S at a gross margin ra te of 30%; $8,000 of the goods remain in the ending inventory of Company S. $20,000 to Company P at a gross margin rate of 35%; $2, 000 of the goods remain in the ending inven to ry of Company P inventory of Company S includes $10,000 of goods purchased from Company P in 2018 at a gross margin rate of 25% . inventory of Company P includes $5 , 000 of goods purchased from Company S in 2018 at a gross margin rate of 40% 1. During 2019 Company S made sales of The beginn ing The beginning On January 1, 2017 Company P sold equipment with a book value of 2. $20,000 to Company S for $26,000. remaining useful life. On January 1, 2016 Company Pacquired 20% of the 12% bonds of Company S for $35,000 when the bonds of Company S had a carrying value of $140 ,000 . companies use straight-line amortization The equipment has a 4 year 3. The bonds mature on January 1, 2026. Both Required: Prepare the necessary eliminations for the preparation of consolida ted financial statements on December 31, 2019. Prepare a computer spreadsheet for the preparation of a consolidated income statement, a consolidated retained earnings statement, and a consolidated balance sheet on December 31, 1. 2. 2019