Pep Corporation acquired 100 percent of See Company stock on January 1, 2018 for $750,000 cash. Following are pre-closing trial balance amounts for Pep Corporation and See Company as of December 31, 2018 PEP CORPORATION SEE CORPORATION Debit Debit Credit Credit $1,436,000 $223,900 Cash Accounts Receivable 294,000 204,000 473,000 Inventory Investment in See Corp. 116,000 932,900 Land 790,000 225,000 Buildings 625,000 360,000 Equipment Cost of Goods Sold 481,000 233,000 382,000 164,000 Depreciation Expense, Building Depreciation Expense, Equipment 51,000 14,500 48,000 25,600 209,000 Selling & Administrative Expense 89,000 Dividends Declared 60,000 45,000 $116,000 Accumulated Depreciation, Bldg Accumulated Depreciation, Equip Accounts Payable $204,000 144,000 128,000 118,000 65,000 Bonds Payable 500,000 120,000 Common Stock ($1 par) Additional Paid In Capital Retained Earnings (01/01/2018) 600,000 127,000 2,300,000 223,000 769,000 400,000 Sales 919,000 521,000 Income from See Corp. 227,900 $5,781,900 $5,781,900 $1,700,000 $1,700,000 Additional Information: 1. On January 1, 2018, the book values of See's net assets and liabilities approximated fair values. 2. Pep Corporation uses the equity method to account for its Investment in See Company. 3. The general ledger numbers given above (HINT: those in boldface) include the effects of the JOURNAL ENTRIES that were recorded by Pep at the acquisition date and during 2018 to account for its investment in See Company. These boldface figures should be used as check figures for your solution. REQUIRED: (CLEARLY SHOW ALL OF YOUR WORK) a. Prepare the Investment Analysis for Pep Company's Investment in See account AT JANUARY 1, 2018 (3 POINTS) Fair Value of Consideration given from Pep Company to See's Shareholders: Fair Value of Any Noncontrolling Interest Total Fair Value Book Value ot See Company's Net Identitiable Assets Differential (if any) Identifiable Excess (if any) New Goodwill (if any) b. Recreate the JOURNAL ENTRIES recorded by Pep with regard to its investment in See Company at January 1, 2018 and during 2018. (8 POINTS) c. Using your information from b. above, calculate the 12/31/18 balances for Pep Company's Investment in See and Income from See accounts. Use the T accounts provided below. (4 POINTS) Pep Company's General Ledger Investment in See Income from See d. Prepare the necessary CONSOLIDATION WORKSHEET ENTRY (or ENTRIES if you choose to prepare the optional accumulated depreciation entry) at December 31, 2018. (9 POINTS) e. Prepare the consolidation worksheet for the period ended December 31, 2018. You may use either the template provided below or on the next page. (16 POINTS) ORPORATION AND SEE MPANY Consolidation Worksheet For the Period Ending December 31, 2018 P'S SEES CONSOUDATION ENTRIES Consolidated G/L G/L Accounts Debit Credit Totals Income Statement 521,000 Sales S 919,000 (164,000) (14,500) Less Cost of Goods Sold (382,000) (51,000 (48,000 (209,000) S Less Depredation Expense, Building Less: S Depredation Expense, Equipment Selling & Administrative Expense S (25,600) Less (89,000) Income from See Corp. $ 227900 456.900 Net Income S 227,900 Statement of Retained Earnings 769 000 456.900 (60,000) Retained Earnings (01/01/2018) Net income (above) S 400,000 S 227,900 Dividends Declared S (45,000) Retained earnings, 12/31/18 S1,165,900 S 582,900 Balance Sheet S Cash S1436,000 223,900 Accounts Receivable 294,000 204,000 473,000 Inventory S 116,000 Investment in See Corp. 932,900 S 225,000 Land 790,00 Buildings 625,000 360,000 S Equipment Accumulated Depreciation, Bldg S 481000 233,000 $ (204,000) S (116,000) Accumulated Depreciation, Equip Total Assets S (144.000) (128,000) S 4,683,900 1,117,900 Accounts Payable 118.000 65.000 Bonds Payable Common Stock ($1 par) Additional Paid in Capital Retained earnings, 12/31/18 (above) 500,000 120,000 600 $ 127,000 S $2300,000 223,000 $1,165900 582,900 S Total Liabilities & Stockholders' Equity S 4,683,900 1.117.900 NET ASSETS ASSETS LIABILITIES TAL STOCKHOLDERS EQUITY OR PEP CORPORATION AND SEE COMPANY Consolidation Worksheet For the Period Ending December 31, 2018 PEP'S Consolidated SEES CONSOUDATION ENTRIES G/L G/L Debit Credit Accounts Totals Income Statement $ 521.000 Sales 919,000 Less Less $ (382,000) (51,000) Cost of Goods Sold (164,000) (14,500) Depreciation Expense, Building (48,000) (209,000) (25,600) (89,000) Less: Depreciation Expense, Equipment Selling & Administrative Expense Less: Income from See Corp. 227,900 $ 227,900 Net Income 456,900 Statement of Retained Earnings Retained Eamings (01/01/2018) Net income (above) 769,000 400,000 $ 227.900 456,900 Dividends Declared (45,000) (60,000) Retained earnings, 12/31/18 1,165,900 582,900 Balance Sheet S 223,900 $ 204,000 $1,436,000 Cash Accounts Receivable 294,000 Inventory 473,000 116,000 Investment in See Corp. 932,900 Land 790,000 225,000 Buildings 625,000 360,000 $ 233.000 Equipment Accumulated Depreciation, Bldg Accumulated Depreciation, Equip 481,000 $ (116,000) $ (128,000) (204,000) $ (144,000) 4,683,900 $1,117,900 Total Assets Accounts Payable 118,000 65,000 Bonds Payable 500,000 120,000 Comman Stock ($1 par) Additional Paid In Capital Retained earnings, 12/31/18 (above) $ 127,000 223.000 $ 582,900 600,000 $2,300,000 $1,165,900 $ 4.683.900 Total Liabilities & Stockholders' Equity $1,117,900 NET ASSETS ASSETS LIABILITIES TOTAL STOCKHOLDERS EQUITY Pep Corporation acquired 100 percent of See Company stock on January 1, 2018 for $750,000 cash. Following are pre-closing trial balance amounts for Pep Corporation and See Company as of December 31, 2018 PEP CORPORATION SEE CORPORATION Debit Debit Credit Credit $1,436,000 $223,900 Cash Accounts Receivable 294,000 204,000 473,000 Inventory Investment in See Corp. 116,000 932,900 Land 790,000 225,000 Buildings 625,000 360,000 Equipment Cost of Goods Sold 481,000 233,000 382,000 164,000 Depreciation Expense, Building Depreciation Expense, Equipment 51,000 14,500 48,000 25,600 209,000 Selling & Administrative Expense 89,000 Dividends Declared 60,000 45,000 $116,000 Accumulated Depreciation, Bldg Accumulated Depreciation, Equip Accounts Payable $204,000 144,000 128,000 118,000 65,000 Bonds Payable 500,000 120,000 Common Stock ($1 par) Additional Paid In Capital Retained Earnings (01/01/2018) 600,000 127,000 2,300,000 223,000 769,000 400,000 Sales 919,000 521,000 Income from See Corp. 227,900 $5,781,900 $5,781,900 $1,700,000 $1,700,000 Additional Information: 1. On January 1, 2018, the book values of See's net assets and liabilities approximated fair values. 2. Pep Corporation uses the equity method to account for its Investment in See Company. 3. The general ledger numbers given above (HINT: those in boldface) include the effects of the JOURNAL ENTRIES that were recorded by Pep at the acquisition date and during 2018 to account for its investment in See Company. These boldface figures should be used as check figures for your solution. REQUIRED: (CLEARLY SHOW ALL OF YOUR WORK) a. Prepare the Investment Analysis for Pep Company's Investment in See account AT JANUARY 1, 2018 (3 POINTS) Fair Value of Consideration given from Pep Company to See's Shareholders: Fair Value of Any Noncontrolling Interest Total Fair Value Book Value ot See Company's Net Identitiable Assets Differential (if any) Identifiable Excess (if any) New Goodwill (if any) b. Recreate the JOURNAL ENTRIES recorded by Pep with regard to its investment in See Company at January 1, 2018 and during 2018. (8 POINTS) c. Using your information from b. above, calculate the 12/31/18 balances for Pep Company's Investment in See and Income from See accounts. Use the T accounts provided below. (4 POINTS) Pep Company's General Ledger Investment in See Income from See d. Prepare the necessary CONSOLIDATION WORKSHEET ENTRY (or ENTRIES if you choose to prepare the optional accumulated depreciation entry) at December 31, 2018. (9 POINTS) e. Prepare the consolidation worksheet for the period ended December 31, 2018. You may use either the template provided below or on the next page. (16 POINTS) ORPORATION AND SEE MPANY Consolidation Worksheet For the Period Ending December 31, 2018 P'S SEES CONSOUDATION ENTRIES Consolidated G/L G/L Accounts Debit Credit Totals Income Statement 521,000 Sales S 919,000 (164,000) (14,500) Less Cost of Goods Sold (382,000) (51,000 (48,000 (209,000) S Less Depredation Expense, Building Less: S Depredation Expense, Equipment Selling & Administrative Expense S (25,600) Less (89,000) Income from See Corp. $ 227900 456.900 Net Income S 227,900 Statement of Retained Earnings 769 000 456.900 (60,000) Retained Earnings (01/01/2018) Net income (above) S 400,000 S 227,900 Dividends Declared S (45,000) Retained earnings, 12/31/18 S1,165,900 S 582,900 Balance Sheet S Cash S1436,000 223,900 Accounts Receivable 294,000 204,000 473,000 Inventory S 116,000 Investment in See Corp. 932,900 S 225,000 Land 790,00 Buildings 625,000 360,000 S Equipment Accumulated Depreciation, Bldg S 481000 233,000 $ (204,000) S (116,000) Accumulated Depreciation, Equip Total Assets S (144.000) (128,000) S 4,683,900 1,117,900 Accounts Payable 118.000 65.000 Bonds Payable Common Stock ($1 par) Additional Paid in Capital Retained earnings, 12/31/18 (above) 500,000 120,000 600 $ 127,000 S $2300,000 223,000 $1,165900 582,900 S Total Liabilities & Stockholders' Equity S 4,683,900 1.117.900 NET ASSETS ASSETS LIABILITIES TAL STOCKHOLDERS EQUITY OR PEP CORPORATION AND SEE COMPANY Consolidation Worksheet For the Period Ending December 31, 2018 PEP'S Consolidated SEES CONSOUDATION ENTRIES G/L G/L Debit Credit Accounts Totals Income Statement $ 521.000 Sales 919,000 Less Less $ (382,000) (51,000) Cost of Goods Sold (164,000) (14,500) Depreciation Expense, Building (48,000) (209,000) (25,600) (89,000) Less: Depreciation Expense, Equipment Selling & Administrative Expense Less: Income from See Corp. 227,900 $ 227,900 Net Income 456,900 Statement of Retained Earnings Retained Eamings (01/01/2018) Net income (above) 769,000 400,000 $ 227.900 456,900 Dividends Declared (45,000) (60,000) Retained earnings, 12/31/18 1,165,900 582,900 Balance Sheet S 223,900 $ 204,000 $1,436,000 Cash Accounts Receivable 294,000 Inventory 473,000 116,000 Investment in See Corp. 932,900 Land 790,000 225,000 Buildings 625,000 360,000 $ 233.000 Equipment Accumulated Depreciation, Bldg Accumulated Depreciation, Equip 481,000 $ (116,000) $ (128,000) (204,000) $ (144,000) 4,683,900 $1,117,900 Total Assets Accounts Payable 118,000 65,000 Bonds Payable 500,000 120,000 Comman Stock ($1 par) Additional Paid In Capital Retained earnings, 12/31/18 (above) $ 127,000 223.000 $ 582,900 600,000 $2,300,000 $1,165,900 $ 4.683.900 Total Liabilities & Stockholders' Equity $1,117,900 NET ASSETS ASSETS LIABILITIES TOTAL STOCKHOLDERS EQUITY