Pea corporation acquired 80 percent of Split Brewing Company's stock on January 1, 20X1, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of Split's book value. On January 1, 20X1, Split issued $300,000 par value, 8 percent, 10-year bonds to Malt Company for $360,000. Pea subsequently purchased $100,000 of the bonds from Malt for $102,000 on January 1, 20X3. Interest is paid semiannually on January1 and July 1.

Summarized balance sheets for Pea and Split as of December 31, 20X4, follow:

PEA CORPORATION
Balance Sheet
December 31, 20X4
Cash & Receivables	$122,500	Accounts Payable	$40,000
Inventory	200,000	Bonds Payable	400,000
Buildings & Equipment (net)	320,000	Common Stock	200,000
Investment in Split Company:		Retained Earnings	309,627
Bonds	101,607
Stock	205,520
Total Assets	949,627	Total Liabilities & Owners' Equity	949,627

SPLIT BREWING COMPANY
Balance Sheet
December 31, 20X4
Cash & Receivables	$124,000	Accounts Payable	$28,000
Inventory	150,000	Bonds Payable	300,000
Buildings & Equipment (net)	360,000	Bond Premium	39,739
		Common Stock	100,000
		Retained Earnings	166,261
Total Assets	634,000	Total Liabilities & Owners' Equity	634,000

At December 31, 20X4, Split holds $42,000 of inventory purchased from Pea, and Pea holds $26,000 of inventory purchased from Split. Split and Pea sell inventory to each other at cost plus markups of 30 percent and 40 percent, respectively. Assume total sales from Pea to Split were $100,000 and from Split to Pea were $50,000.

Required:

a. Prepare all consolidation entries needed on December 31, 20X4, to complete a consolidated balance sheet worksheet. Assume Split earned $74,476 and paid $10,000 in dividends during the year.

A: Record the basic consolidation entry.

B: Record the entry to defer the unrealized profits on inventory transfers.

C: Record the bonds and other debt consolidation entries.

D: Record the entry to eliminate the intercompany interest receivables/payables.

b. Prepare a consolidated balance worksheet.

PEA CORPORATION AND SUBSIDIARY
Consolidated Financial Statement Worksheet
December 31, 20X4
			Consolidation Entries
	Pea Corp.	Split Company	DR	CR	Consolidated
Balance Sheet
Assets
Cash and Receivables
Inventory
Buildings & Equipment (net)
Investment in Split Company Bonds
Investment in Split Company Stock
Total Assets
Liabilities & Equity
Accounts Payable
Bonds Payable
Premium on Bonds Payable
Common Stock
Retained Earnings
NCI in NA of Split Company
Total Liabilities & Equity

c. Prepare a consolidated balance sheet in good form.

PEA CORPORATION AND SUBSIDIARY
Consolidated Balance Sheet
December 31, 20X4
Assets
Total Assets
Liabilities
Stockholders' Equity:
Controlling Interest:
Total Controlling Interest:
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity