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Posted on Sep 04, 2024

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

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 SEE CORPORATION Debit Credit $223,900 204,000 116,000 Cash Accounts Receivable Inventory Investment in See Corp. Land Buildings Equipment Cost of Goods Sold Depreciation Expense, Building Depreciation Expense, Equipment Selling & Administrative Expense Dividends Declared Accumulated Depreciation, Bldg Accumulated Depreciation, Equip Accounts Payable Bonds Payable Common Stock ($1 par) Additional Paid In Capital Retained Earnings (01/01/2018) Sales Income from See Corp. PEP CORPORATION Debit Credit $1,436,000 294,000 473,000 932,900 790,000 625,000 481,000 382,000 51,000 48,000 209,000 60,000 $204,000 144,000 118,000 500,000 600,000 2,300,000 769,000 919,000 227,900 $5,781,900 $5,781,900 225,000 360,000 233,000 164,000 14,500 25,600 89,000 45,000 $116,000 128,000 65,000 120,000 127,000 223,000 400,000 521,000 $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 Total Fair Value Book Value of See Company's Net Identifiable Assets Differential New Goodwin 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 Taccounts 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 entryl at December 31, 2018. 19 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) PEP CORPORATION AND SEE COMPANY Consoldation Worksheet For the Period Ending December 31, 2018 PEP'S GAL CONSOUDATION ENTRIES Debit Credit Consolidated Totals Accounts G/L $ $ Income Statement Sales Cost of Goods Sold Depreciation Expense, Building Depreciation Expense, Equipment Selling & Administrative Expense Income from See Corp Net Income 919,000 (382,000) (51,000) (48,000) 209,000) 227,900 456,900 $ $ $ $ $ 521,000 (164,000) (14,500) (25,600) (89,000) $ $ $ $ 227,900 Statement of Retained Earnings Retained Earnings (01/01/2018) Net Income (above) Dividends Declared Retained eaming, 12/31/18 $ $ 400,000 227,900 $ 269,000 $ 456,900 $ 60,000) $ 1,165,900 $ $82,900 Balance Sheet Cash Accounts Receivable Inventory Investment in See Corp $ $ 223,900 204 000 116,000 Land $ $ 1416,000 $ 294,000 473.000 $ 932,900 $ 790,000 $ 25,000 $ 481,000 $ (204,000) $ (144,000) $4.683.000 Buildings Equipment Accumulated Depreciation, Bldg Accumulated Depreciation Equip Total Arts $ S 225.000 160,000 233,000 (116,000) (128000) 1.117.900 $ Accounts Payable Bonds Payable Common Stock ($1 par Additional Paid in Capital Retained earnings, 12/31/18 (above) Total Liabilities & Stockholders' Equity $ 118,000 $ 500,000 $ 600,000 $ 2.300.000 $ 1.165.900 $ 4,683.000 $ $ $ 65.000 120.000 127,000 223.000 582,900 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 SEE CORPORATION Debit Credit $223,900 204,000 116,000 Cash Accounts Receivable Inventory Investment in See Corp. Land Buildings Equipment Cost of Goods Sold Depreciation Expense, Building Depreciation Expense, Equipment Selling & Administrative Expense Dividends Declared Accumulated Depreciation, Bldg Accumulated Depreciation, Equip Accounts Payable Bonds Payable Common Stock ($1 par) Additional Paid In Capital Retained Earnings (01/01/2018) Sales Income from See Corp. PEP CORPORATION Debit Credit $1,436,000 294,000 473,000 932,900 790,000 625,000 481,000 382,000 51,000 48,000 209,000 60,000 $204,000 144,000 118,000 500,000 600,000 2,300,000 769,000 919,000 227,900 $5,781,900 $5,781,900 225,000 360,000 233,000 164,000 14,500 25,600 89,000 45,000 $116,000 128,000 65,000 120,000 127,000 223,000 400,000 521,000 $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 Total Fair Value Book Value of See Company's Net Identifiable Assets Differential New Goodwin 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 Taccounts 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 entryl at December 31, 2018. 19 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) PEP CORPORATION AND SEE COMPANY Consoldation Worksheet For the Period Ending December 31, 2018 PEP'S GAL CONSOUDATION ENTRIES Debit Credit Consolidated Totals Accounts G/L $ $ Income Statement Sales Cost of Goods Sold Depreciation Expense, Building Depreciation Expense, Equipment Selling & Administrative Expense Income from See Corp Net Income 919,000 (382,000) (51,000) (48,000) 209,000) 227,900 456,900 $ $ $ $ $ 521,000 (164,000) (14,500) (25,600) (89,000) $ $ $ $ 227,900 Statement of Retained Earnings Retained Earnings (01/01/2018) Net Income (above) Dividends Declared Retained eaming, 12/31/18 $ $ 400,000 227,900 $ 269,000 $ 456,900 $ 60,000) $ 1,165,900 $ $82,900 Balance Sheet Cash Accounts Receivable Inventory Investment in See Corp $ $ 223,900 204 000 116,000 Land $ $ 1416,000 $ 294,000 473.000 $ 932,900 $ 790,000 $ 25,000 $ 481,000 $ (204,000) $ (144,000) $4.683.000 Buildings Equipment Accumulated Depreciation, Bldg Accumulated Depreciation Equip Total Arts $ S 225.000 160,000 233,000 (116,000) (128000) 1.117.900 $ Accounts Payable Bonds Payable Common Stock ($1 par Additional Paid in Capital Retained earnings, 12/31/18 (above) Total Liabilities & Stockholders' Equity $ 118,000 $ 500,000 $ 600,000 $ 2.300.000 $ 1.165.900 $ 4,683.000 $ $ $ 65.000 120.000 127,000 223.000 582,900 1,117,900 $ NET ASSETS ASSETS - LIABILITIES TOTAL STOCKHOLDERS' EQUITY