Question
Parent Corporation paid $90,000 to acquire all the common shares of Subsidiary Inc. on December 31, 20148. At that date, Parent Corporation also had an
Parent Corporation paid $90,000 to acquire all the common shares of Subsidiary Inc. on December 31, 20148. At that date, Parent Corporation also had an outstanding note payable to Subsidiary Inc. in the amount of $50,000. Assume that Parent Corporation and Subsidiary Inc. had the following account balances at December 31, 2018 (immediately after the investment):
Assets:ParentSubsidiary
CorporationInc.
Cash $ 10,000$ 35,000
Note receivable from Parent Corporation50,000
Inventory40,00060,000
Investment in Subsidiary Inc.90,000
Other assets110,00075,000
Total $250,000 $220,000
Liabilities and shareholders' equity:
Accounts payable$ 30,000$130,000
Note payable to Subsidiary Inc.50,000
Common shares 100,00060,000
Retained earnings70,00030,000
Total $250,000$220,000
a) Give the consolidating worksheet entries necessary at December 31, 2018 in journal entry format.
b) Prepare consolidated balance sheet at December 31, 2018.
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