Peer Corporation paid $64,000 to acquire 80% of Sizee Corporation's outstanding voting common stock at book value on May 1, 2017. The stockholders' equity of Sizee on January 1, 2017 consisted of $40,000 Capital Stock and $20,000 Retained Earnings. Sizee's total dividends for 2017 were $6,000, paid equally on April 1 and October 1. Sizee's net income was earned uniformly throughout 2017. In 2017, pre-acquisition sales were $10,000 and pre-acquisition expenses were cost of sales for $5,000. (There were no other pre-acquisition expenses in 2017.)

During 2017, Peer made sales of $20,000 to Sizee at a gross profit of $3,000. One-half of this merchandise was inventoried by Sizee at year-end. Peer sold equipment with a ten-year remaining useful life to Sizee at a $2,000 gain on December 31, 2017. The straight-line depreciation method is used by both companies. The equipment has no salvage value.

Financial statements of Peer and Sizee Corporations for 2017 appear in the first two columns of the partially completed consolidation working papers.

Required:

Compute with steps all the missing information

Complete the consolidating working papers for Peer Corporation and Subsidiary for the year ending December 31, 2017.

Peer

Sizee

Eliminations

Consolidated

Debit

Credit

INCOME STATEMENT

Sales

100,000

$40,000

Income of Sizee

Gain on sale of equipment

2,000

Cost of Sales and expenses

(52,500)

(21,000)

Depreciation expense

(11,000)

(4,000)

Net income

15,000

Retained Earnings 1/1

60,000

20,000

Add: Net income

15,000

Less: Dividends

(10,000)

( 6,000)

Retained Earnings 12/31

29,000

BALANCE SHEET

Receivables - net

19,000

16,000

Inventories

20,500

22,000

Buildings - net

25,000

20,000

Equipment - net

40,000

22,000

2,000

Investment in Sizee

TOTAL ASSETS

$

$ 80,000

Accounts payable

35,000

11,000

Capital Stock

60,000

40,000

Retained Earnings

75,000

29,000

TOTAL LIAB. & EQUITY

$

$ 80,000