Pat P 10-3 [Preferred stock] Consolidation workpaper (subsidiary preferred stock, equity method, mid-year purchase) Financial statements for Pat and Sal Corporations for 2011 are summarized as follows (in thousands): Sal Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales S1,233 $700 Income from Sal 68 Cost of sales (610) (400) Other expenses (390) (210) Net income 301 Add: Retained earnings January 1 501 200 Less: Dividends (200) (50) Retained earnings December 31 S240 90 S 602 Subsidiary Preferred Stock, Consolidated Earnings per Share, and Consolidated Income Taxation 351 Pat Sal $ 191 200 900 711 $2.002 S 50 300 600 S950 Balance Sheet at December 31 Cash Other current assets Plant assets-net Investment in Sal Total assets Current liabilities S10 preferred stock Common stock Other paid-in capital Retained earnings Total equities $ 200 1,200 $ 60 100 500 50 240 5950 602 $2.002 Pat owns 90,000 shares of Sal's outstanding voting common stock at December 31, 2011. These shares were acquired in two lots as follows: Date Shares Purchase Price Lot January 1, 2010 70,000 $490.000 Lot 2 April 1, 2011 20,000 152,000 The stockholders' equity of Salat year-end 2009, 2010, and 2011 was as follows (in thousands): December 31 2009 2010 2011 $10 preferred stock, $100 par, cumulative $100 S100 S100 with no dividends in arrears Common stock, 55 par 500 500 500 Other paid in capital 50 SO SO Retained earnings 150 200 240 Total stockholders' equity $800 5850 $890 Sal's net income for 2011 is $90,000, carned proportionately throughout the year, and its quar- terly dividends of $12,500 are declared on March 15, June 15, September 15, and December 15. (Quarterly dividends of $12,500 include dividends on common stock and preferred stock.) There are no intercompany receivables or payables at December 31, 2011, and there have been no inter- company transactions other than dividends. REQUIRED: Prepare a consolidation workpaper for Pat and Subsidiary for 2011 Courier v 10 ' ' Gene Sch [B Paste BIU ava- V $ V SS 034 Ax & fx N e 5011 D FG H IJ K L M 1 NAME HERE PAT CORPORATION AND SUBSIDIARY 2 P 10-3 CONSOLIDATION WORKSHEET 3 FOR THE YEAR ENDED DECEMBER 31, 2011 4 1 80% | Adjustments & Eliminations Consolidated (in thousands) 5 Pat Sal Debits Credits Statements 6 INCOME STATEMENT 7 Sales 1,233 700 1,933 8 Income from Sal 1 681 68 9 Cost of sales (610) (400) (1,010) 10 Other expenses (390) (210) (600) 11 Proacquisition income 01 12 Noncontrolling interest sha 0 13 Nel income 301 90 391 14 RETAINED EARNINGS 15 Retained earings beg 200 701 16 Net income 301 901 391 17 Dividends 1 (200) (50) (250) 18 19 20 Retained camings end 602 240 842 21 BALANCE SHEET 22 Cash 1911 50 23 Other current assets 241 200 300 24 Plant assets 500 900 25 Investment in Sal 1,500 711 26 711 27 Goodwill 28 Total assets 0 2,002 950 29 2.952 30 Current liabilities 200 31 S10 preferred stock 60 260 32 Common stock 1001 1 100 33 Other paid in capital 34 Retained carnings SO 1.700 602 35 Total equities 240 SO! 2,002 36 No controlling interest.common 950 37 38 No controlling interest-preferred 0 0 0 2.952 21 52 600 ! 1,200 5001 8421 88