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Pillow Corporation acquired 80 percent ownership of Sheet Company on January 1, 20X7, for $173,000. At that date, the fair value of the noncontrolling interest

Pillow Corporation acquired 80 percent ownership of Sheet Company on January 1, 20X7, for $173,000. At that date, the fair value of the noncontrolling interest was $43,250. The trial balances for the two companies on December 31, 20X7, included the following amounts:

Pillow Corporation Sheet Company
Item Debit Credit Debit Credit
Cash $ 38,000 $ 25,000
Accounts Receivable 50,000 55,000
Inventory 240,000 100,000
Land 80,000 20,000
Buildings & Equipment 500,000 150,000
Investment in Sheet Company 202,000
Cost of Goods Sold 500,000 250,000
Depreciation Expense 25,000 15,000
Other Expenses 75,000 75,000
Dividends Declared 50,000 20,000
Accumulated Depreciation $ 155,000 $ 75,000
Accounts Payable 70,000 35,000
Mortgages Payable 200,000 50,000
Common Stock 300,000 50,000
Retained Earnings 290,000 100,000
Sales 700,000 400,000
Income from Sheet Company 45,000
$ 1,760,000 $ 1,760,000 $ 710,000 $ 710,000

Additional Information

  1. On January 1, 20X7, Sheet reported net assets with a book value of $150,000 and a fair value of $191,250. Accumulated depreciation on Buildings and Equipment was $60,000 on the acquisition date.
  2. Sheets depreciable assets had an estimated economic life of 11 years on the date of combination. Goodwill of $25,000 was recorded at the acquisition.
  3. Pillow used the equity method in accounting for its investment in Sheet.
  4. Detailed analysis of receivables and payables showed that Sheet owed Pillow $16,000 on December 31, 20X7.

Prepare a three-part consolidation worksheet as of December 31, 20X7.

PILLOW CORPORATION AND SUBSIDIARY
Worksheet for Consolidated Financial Statements
December 31, 20X7
Consolidation Entries
Pillow Corp. Sheet Co. DR CR Consolidated
Income Statement
Sales
Less: COGS
Less: Depreciation expense
Less: Other expenses
Income from Sheet Company
Consolidated net income $0 $0 $0 $0 $0
NCI in net income
Controlling Interest in Net Income $0 $0 $0 $0 $0
Statement of Retained Earnings
Beginning balance
Net income
Less: Dividends declared
Ending Balance $0 $0 $0 $0 $0
Balance Sheet
Cash
Accounts receivable
Inventory
Land
Buildings and equipment
Less: Accumulated depreciation
Investment in Sheet Company
Goodwill
Total Assets
Accounts payable
Mortgage payable
Common stock
Retained earnings
NCI in NA of Sheet Company
Total Liabilities & Equity $0 $0 $0 $0 $0

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