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On april 1,2016,Popol corportion purchased 80% of the outstanding stock of Sol company for 425,000. A condensed financial statement of financial position of Sol company

On april 1,2016,Popol corportion purchased 80% of the outstanding stock of Sol company for 425,000. A condensed financial statement of financial position of Sol company at the purchase date follows:

Assets;

current assets 180,000

Non current assets 320,000

Total assets 500,000

Liabilities and equity:

Liabilities 100,000

Common stock 200,000

APIC 100,000

Retained Earnings 100,000

Total liab and equity 500,000

All book values approximated fair values on the purchase date. Any excess costs is attributed to goodwill

The following data has been gathered pertaining to the first 2 years of operation since Popol corporations purchase of Sol company's stock

a. Intercompany sales of merchandise are summarized as follows:

Date:. April 1,2016 transaction: downstream,sales:35,000,gross profit: 15% merchandise remaining in purchaser inventory: 9,000

March 31,2017 transaction: upstream, sales: 20,000 gross profit: 20%. MERCHANDISE remaining in purchaser inventory: 3,500

Date: April 1,2017,TRANSACTION: DOWNSTREAM,SALES: 32,000 GROSS PROFIT RATE: 22,,% Merchandise remaining purchase r inventory 6,000..

March31,2018,,TRANSACTION:UPSTREAM,,SALES 30,000,,GROSS PROFIT RATE 25%, merchandise remaining purchase rs inventory: 3,000

B. On march 1,2018 Popol owed Sol 10,000 and Sol owned Popol 5,000 as a result if the intercompany sales

C. Popol paid 25,000 in cash dividends on march 20,2017 and 2018, Sol paid its first cash dividend on March 10,2018 ,giving each share of common stock at 0.15 cash dividend.

D. The trial balance if the two companies as of March 31,2018 as follows:

Account:

Cash

(popol corp)216,000

(Sol corp) 44300

Account receivable (popol) 290,000

(Sol) 97,000

Inventory:

( popol) 310,000

(Sol) 80,000

Investment in sol:

(Popol) 425,000

PPE:

(Popol) 1,991,000

(Sol) 340,000

Goodwill:

(Popol) 60,000

Accounts payable:

(Popol),(642,000)

(Sol), (106,300)

Common stock,0.15 par :

(Popol) 250,000

Common stock,1 par

(Sol) (200,000)

APIC:

(POPOL) (1250,000)

(SOL) ( 100,000)

Retained earnings April 1,2017:

(Popol) (1105,000)

(Sol) (140,000)

Sales:

Popol( 880,000)

(Sol) (630,000)

Dividend income:

(Popol) (24,000)

COGS:

(POPOL) 704,000

(SOL) 504,000

OTHER EXPENSE;

(POPOL) 130,000

(SOL) 81,000

DIVIDEND DECLARED:

(POPOL) 25,000

(SOL) 30,000

REQUIREMENTS:

1. PLEASE PREPARE THE JOURNAL ENTRIES ON THE DATE OF ACQUISITION. THEN MAKE THE DETERMINATION AND ALLOCATION IF EXCESS/GOODWILL SCHEDULE ON APRIL 1,2016, FURTHER, PROVIDE THE ELIMINATION ENTRIES IN MAKING THE CONSOLIDATED FINANCIAL STATEMENT AT THE DATE OF ACQUISITION.

2. PLEASE PREPARE THE ELIMINATION ENTRIES AND WORKING PAPER NECESSARY TO PRODUCE THE CONSOLIDATED STATEMENT S OF POPOL AND SOL FOR THE YEAR ENDED MARCH 31,2018

C. PLEASE PREPARE THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31,2018.

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