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 1,201, Split issued $313,000 par value, 8 percent, 10 -year bonds to Mait Company. Pea subsequently purchased $113,000 of the bonds from Malt for $125,000 on January 1, 20X3. Interest is paid semiannually on January 1 and July 1 . Assume Pea Corporation uses the fully adjusted equity method. Summarized balance sheets for Pea and Split as of December 31,204, follow: At December 31,204, Split holds $42,000 of inventory purchased from Pea, and Pea holds $26,000 of inventory purchased from Split Split and Pea sell at cost plus markups of 30 percent and 40 percent, respectively. Assume total sales from Pea to Split were $133,000 and from Split to Pea were $65,000 Required: a. Prepare all consolidation entries needed on December 31, 204, to complete a consolidated balance sheet worksheet. Assume Split earned $95,000 and paid $20,000 in dividends during the year. (If no entry is required for o transaction/event, select "No journol entry required" in the first account field.) Record the basic consolidation entry. Note: Enter debite before credits. b. Prepare a consolidated balance sheet worksheet. (Values in the first two columns (the "porent" ond "subsidiary" balances) that ore to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive volues. For accounts where multiple adjusting entries are required, combine all debit entries into one amount ond enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) c. Prepare a consolidated balance sheet in good form. (Amounts to be deducted should be indicated with a minus sign.) 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 1,201, Split issued $313,000 par value, 8 percent, 10 -year bonds to Mait Company. Pea subsequently purchased $113,000 of the bonds from Malt for $125,000 on January 1, 20X3. Interest is paid semiannually on January 1 and July 1 . Assume Pea Corporation uses the fully adjusted equity method. Summarized balance sheets for Pea and Split as of December 31,204, follow: At December 31,204, Split holds $42,000 of inventory purchased from Pea, and Pea holds $26,000 of inventory purchased from Split Split and Pea sell at cost plus markups of 30 percent and 40 percent, respectively. Assume total sales from Pea to Split were $133,000 and from Split to Pea were $65,000 Required: a. Prepare all consolidation entries needed on December 31, 204, to complete a consolidated balance sheet worksheet. Assume Split earned $95,000 and paid $20,000 in dividends during the year. (If no entry is required for o transaction/event, select "No journol entry required" in the first account field.) Record the basic consolidation entry. Note: Enter debite before credits. b. Prepare a consolidated balance sheet worksheet. (Values in the first two columns (the "porent" ond "subsidiary" balances) that ore to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive volues. For accounts where multiple adjusting entries are required, combine all debit entries into one amount ond enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) c. Prepare a consolidated balance sheet in good form. (Amounts to be deducted should be indicated with a minus sign.)
