Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20x1, for $149,000. On that date, the fair value of the noncontrolling interest was $37,250, and Slice reported retained earnings of $43,000 and had $96,000 of common stock outstanding, Pizza has used the equity method in accounting for its investment in Slice. Trial balance data for the two companies on December 31, 20x5, are as follows: Pizza Slice Corporation Products Company Item Debit Credit Debit Credit Cash & Receivables $ 90,000 $ 81,000 Inventory 275,000 101,000 Land 89,000 89,000 Buildings & Equipment 504,000 154,000 Investment in slice Products Company 182,900 Cost of Goods Sold 113,000 43,000 Depreciation Expense 21,000 11,000 Inventory Losses 11,000 6,000 Dividends Declared 44,000 22,000 Accumulated Depreciation $ 203,000 $ 77,000 Accounts Payable 59,000 16,000 Notes Payable 227,680 127,000 Common Stock 294,000 96,000 Retained Earnings 308,000 86,000 Sales 206,000 105,000 Income from Slice Products Company 32,220 $1,329,900 $1,329,900 $507,000 $507,000 Additional Information 1. On the date of combination, the fair value of Slice's depreciable assets was $47,250 more than book value. The accumulated depreciation on these assets was $10,000 on the acquisition date. The differential assigned to depreciable assets should be written off over the following 10-year period. 2. There was $13,000 of intercorporate receivables and payables at the end of 20X5. Required: a. Prepare all journal entries that Pizza recorded during 20x5 related to its investment in Slice. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet > A Record Pizza Corporation's 80% share of Slice Products Company's 20X5'income. Note: Enter debits before credits. General Journal Debit Credit Event 1 Record entry View general journal Clear entry b. Prepare all consolidation entries needed to prepare consolidated statements for 20X5. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list Consolidation Worksheet Entries Record basic consolidation entry. Note: Enter debits before credits. Accounts Debit Credit Event 1 Record entry Clear entry view consolidation entries c. Prepare a three-part worksheet as of December 31, 20X5. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and 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.) Worksheet for Consolidated Financial Statements December 31, 20X5 Consolidation Entries Pizza Slice DR CR Consolidated Corp. Products Co. Income Statement Sales Less: COGS Less: Depreciation expense Less: Inventory losses Income from Slice Products Company Consolidated net income $ 0 $ 0 $ 0 $ 0 $ 0 NCI in net income Controlling Interest in Net $ 0 $ 0 $ 0 $ 0 $ 0 Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance $ 0 $ 0 $ 0 $ 0 $ 0 Balance Sheet Cash and receivables Inventory Land Buildings and equipment Less: Accumulated depreciation Investment in Slice Products Company Total Assets $ 0 $ 0 $ 0 $ 0 $ 0 Accounts payable Notes payable Common stock Retained earnings NCI in NA of Slice Products Company Total Liabilities and Equity $ 0 $ 0 $ 0 $ 0 $ 0
