Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PLEASE FILL IN ALL LINES ( DO NOT PIECE THEM TOGETHER ) FOR INCOME STATEMENT AND OTHER FINANCIAL STATEMENTS! PLEASE USE PICTURE PROVIDED! Purple Manufacturing

PLEASE FILL IN ALL LINES (DO NOT PIECE THEM TOGETHER) FOR INCOME STATEMENT AND OTHER FINANCIAL STATEMENTS! PLEASE USE PICTURE PROVIDED! Purple Manufacturing purchased 60 percent of the ownership of Socks Corporation stock on January 1,20X1, at underlying book
value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Socks Corporation. Purple
also purchased $50,000 of Socks bonds at par value on December 31,203. Socks sold the bonds on January 1,201, at 120 ; they
have a stated interest rate of 12 percent. Interest is paid semiannually on June 30 and December 31. Assume Purple uses the fully
adjusted equity method.
On December 31,20X1, Socks sold a building with a remaining life of 15 years to Purple for $30,000. Socks had purchased the building
10 years earlier for $40,000. It is being depreciated based on a 25-year expected life.
Trial balances for the two companies on December 31203, are as follows:
Prepare a consolidated balance sheet for 203.
Prepare a consolidated income statement for 203.Purple Manufacturing purchased 60 percent of the ownership of Socks Corporation stock on January 1,20X1, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Socks Corporation. Purple also purchased $50,000 of Socks bonds at par value on December 31,20X3. Socks sold the bonds on January 1,20X1, at 120; they have a stated interest rate of 12 percent. Interest is paid semiannually on June 30 and December 31. Assume Purple uses the fully adjusted equity method.
On December 31,20X1, Socks sold a building with a remaining life of 15 years to Purple for $30,000. Socks had purchased the building 10 years earlier for $40,000. It is being depreciated based on a 25-year expected life.
Trial balances for the two companies on December 3120X3, are as follows:
Item Purple Manufacturing Socks Corporation
Debit Credit Debit Credit
Cash $ 68,000 $ 55,000
Accounts Receivable 100,00075,000
Inventory 120,000110,000
Investment in Socks Corporation Bonds 50,000
Investment in Socks Corporation Stock 103,080
Depreciable Assets (net)360,000210,000
Interest Expense 20,00020,000
Operating Expenses 302,200150,000
Dividends Declared 40,00010,000
Accounts Payable $ 94,200 $ 52,000
Bonds Payable 200,000200,000
Bond Premium 28,000
Common Stock 300,000100,000
Retained Earnings 146,64050,000
Sales 400,000200,000
Income from Socks Corporation 22,440
Total $ 1,163,280 $ 1,163,280 $ 630,000 $ 630,000
Required:
Prepare a consolidation worksheet for 20X3 in good form.
Prepare a consolidated balance sheet, income statement, and statement of changes in retained earnings for 20X3.
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing

Authors: Alan Millichamp, John Taylor

11th Edition

1473749301, 978-1473749306

More Books

Students also viewed these Accounting questions

Question

What is clash detention?

Answered: 1 week ago

Question

8. How are they different from you? (specifically)

Answered: 1 week ago