On 1/1/2014 CARSON purchased all of the stock of TRUMP for book value when TRUMP had $1,000,000 in retained earnings and $3,000,000 in common stock. [note: this is the balance sheet given in problem 1b, but for this problem we are buying 100% at book value]

On 12/31/2014 the balance sheets of TRUMP and CARSON Companies were as follows:

TRUMP CARSON

Cash $1,200,000 $5,000,000

a/r $2,000,000 $7,000,000

land $1,000,000 $3,000,000

equipment $2,000,000 $9,000,000

a/d equip $1,100,000 $1,800,000

investment TRUMP ?

total assets $5,100,000 $23,000,000

a/p $1,000,000 $2,000,000

c/s $3,000,000 $12,000,000

r/e $1,100,000 ?

Notes: The equipment has a 10 year life with no salvage.

Both TRUMP AND CARSON paid dividends this year.

Income statements for the year are as follows:

TRUMP CARSON

Sales 830,000 4,500,000

Cogs 600,000 2,800,000

Gross profit 230,000 1,700,000

Dep exp 100,000 800,000

Invest inc. 0 ?

Income 130000 ?

REQUIRED:

MAKE THE JOURNAL ENTRIES CARSON MAKES THIS YEAR BASED ON ITS OWNERSHIP OF TRUMP (LET ME KNOW WHAT METHOD YOU ARE USING)

MAKE THE WORKSHEET ENTRIES NEEDED AT 12/31

PREPARE THE CONSOLIDATED BALANCE SHEET

PREPARE THE CONSOLIDATED INCOME STATEMENT