Question
On January 1, 2012, Parker Company purchased 95% of the outstanding common stock of Sid Company for $160,000. At that time, Sid's stockholders' equity consisted
On January 1, 2012, Parker Company purchased 95% of the outstanding common stock of Sid Company for
$160,000. At that time, Sid's stockholders' equity consisted of common stock, $120,000; other contributed capital,
$10,000; and retained earnings, $23,000. On December 31, 2012, the two companies' trial balances were as
follows:
Parker Sid
Cash $ 62,000 $ 30,000
Accounts Receivable 32,000 29,000
Inventory 30,000 16,000
Investment in Sid Company 160,000 0
Plant and Equipment 105,000 82,000
Land 29,000 34,000
Dividends Declared 20,000 20,000
Cost of Goods Sold 130,000 40,000
Operating Expenses 20,000 14,000
Total Debits $588,000 $265,000
Accounts Payable $ 19,000 $ 12,000
Other Liabilities 10,000 20,000
Common Stock 180,000 120,000
Other Contributed Capital 60,000 10,000
Retained Earnings, 1/1 40,000 23,000
Sales 260,000 80,000
Dividend Income 19,000 0
Total Credits $588,000 $265,000
Required:
A. Prepare a consolidated statements workpaper on December 31, 2012.
B. Prepare a consolidated statements workpaper on December 31, 2013, assuming trial balances for Parker and
Sid on that date were:
Parker Sid
Cash $ 67,000 $ 16,000
Accounts Receivable 56,000 32,000
Inventory 38,000 48,500
Investment in Sid Company 160,000 0
Plant and Equipment 124,000 80,000
Land 29,000 34,000
Dividends Declared 20,000 20,000
Cost of Goods Sold 155,000 52,000
Operating Expenses 30,000 18,000
Total Debits $679,000 $300,500
Accounts Payable $ 16,000 $ 7,000
Other Liabilities 15,000 14,500
Common Stock 180,000 120,000
Other Contributed Capital 60,000 10,000
Retained Earnings, 1/1 149,000 29,000
Sales 240,000 120,000
Dividend Income 19,000 0
Total Credits $679,000 $300,500
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