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On 1/1/2021, P Company purchased 90% of the outstanding common stock of S Company for $180,000. At that time, S company's stockholders' equity consisted of

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On 1/1/2021, P Company purchased 90% of the outstanding common stock of S Company for $180,000. At that time, S company's stockholders' equity consisted of common stock $120,000; other contributed capital $10,000; and retained earnings $23,000. Assume that the difference between implied and book value is attributed to Goodwill. P company and S company's income statement, retained earnings statement, and balance sheet information on 12/31/2021 is presented as follows. P company uses the cost method. Income Statement Sales Dividend income Total revenue Cost of goods sold Other expenses Total cost and expense Net income Noncontrolling interest Net income P Company S Company S 260,000 $ 80,000 18,000 278,000 80,000 130,000 40,000 20,000 14,000 150,000 54,000 128,000 26,000 s Company 30,000 29,000 16,000 Balance Sheet Cash Accounts receivable Inventory Investment in S Company Plant and equipment Land Goodwill Total assets P Company $ 42,000 $ 32,000 30,000 180,000 105,000 29,000 82,000 34,000 $ 418,000 $ 191,000 S 128,000 $ 26,000 S Retained Earnings Statement Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 40,000 128,000 (20,000) 148,000 $ Accounts payable Other liabilities 23,000 Common stock 26,000 Other contributed capital (20,000) Retained earnings 29,000 Total liabilities & equity 19,000 $ 10,000 180,000 60,000 149,000 418,000 $ 12,000 20,000 120,000 10,000 29,000 191,000 $ Requirements: (1) Calculate the controlling interest in consolidated Net Income on 12/31/2021. (2) Calculate the consolidated balances for Retained Earnings on 12/31/2021. (3) Calculate the Noncontrolling Interest in Equity balance on 12/31/2021. (4) Prepare the workpaper entries that would be made on a consolidated statements workpaper on 12/31/2021. (5) Prepare the workpaper entry to establish reciprocity under the cost method in the preparation of a consolidated statements workpaper on 12/31/2022. On 1/1/2021, P Company purchased 90% of the outstanding common stock of S Company for $180,000. At that time, S company's stockholders' equity consisted of common stock $120,000; other contributed capital $10,000; and retained earnings $23,000. Assume that the difference between implied and book value is attributed to Goodwill. P company and S company's income statement, retained earnings statement, and balance sheet information on 12/31/2021 is presented as follows. P company uses the cost method. Income Statement Sales Dividend income Total revenue Cost of goods sold Other expenses Total cost and expense Net income Noncontrolling interest Net income P Company S Company S 260,000 $ 80,000 18,000 278,000 80,000 130,000 40,000 20,000 14,000 150,000 54,000 128,000 26,000 s Company 30,000 29,000 16,000 Balance Sheet Cash Accounts receivable Inventory Investment in S Company Plant and equipment Land Goodwill Total assets P Company $ 42,000 $ 32,000 30,000 180,000 105,000 29,000 82,000 34,000 $ 418,000 $ 191,000 S 128,000 $ 26,000 S Retained Earnings Statement Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 40,000 128,000 (20,000) 148,000 $ Accounts payable Other liabilities 23,000 Common stock 26,000 Other contributed capital (20,000) Retained earnings 29,000 Total liabilities & equity 19,000 $ 10,000 180,000 60,000 149,000 418,000 $ 12,000 20,000 120,000 10,000 29,000 191,000 $ Requirements: (1) Calculate the controlling interest in consolidated Net Income on 12/31/2021. (2) Calculate the consolidated balances for Retained Earnings on 12/31/2021. (3) Calculate the Noncontrolling Interest in Equity balance on 12/31/2021. (4) Prepare the workpaper entries that would be made on a consolidated statements workpaper on 12/31/2021. (5) Prepare the workpaper entry to establish reciprocity under the cost method in the preparation of a consolidated statements workpaper on 12/31/2022

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