Please help with Part D and check if A,B,C is correct. Any help is appreciated. Thank you in advance!!
Prince Corporation holds 75 percent of the common stock of Sword Distributors Inc., purchased on December 31, 20X1, for $2,160,000. At the date of acquisition, Sword reported common stock with a par value of $910,000, additional paid-in capital of $1,260,000, and retained earnings of $530,000. The fair value of the noncontrolling interest at acquisition was $720,000. The differential at acquisition was attributable to the following items: Inventory (sold in 20X2) Land Goodwill Total Differential $ 45,000 63,000 72,000 $180,000 During 20X2, Prince sold a plot of land that it had purchased several years before to Sword at a gain of $25,200; Sword continues to hold the land. In 20X6, Prince and Sword entered into a five-year contract under which Prince provides management consulting services to Sword on a continuing basis; Sword pays Prince a fixed fee of $82,000 per year for these services. At December 31, 20X8, Sword owed Prince $20,500 as the final 20X8 quarterly payment under the contract. On January 2, 20X8, Prince paid $260,000 to Sword to purchase equipment that Sword was then carrying at $300,000. Sword had purchased that equipment on December 27, 20X2, for $450,000. The equipment is expected to have a total 15-year life and no salvage value. The amount of the differential assigned to goodwill has not been impaired. At December 31, 20X8, trial balances for Prince and Sword appeared as follows: $ Item Cash Current Receivables Inventory Investment in Sword Distributors Land Prince Corporation Debit Credit 55,700 121,800 290,000 2,806, 800 400,000 Sword Distributors Inc. Debit Credit $ 43,000 109,400 231,900 1,220,000 2,600,000 2,173,000 198,000 1,364,000 40,000 3,150,000 524,000 72,000 222,000 10,000 Buildings & Equipment Cost of Goods Sold Depreciation & Amortization Other Expenses Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Common Stock Additional Paid-in Capital Retained Earnings, January 1 Sales Other Income or Loss Income from Sword Distributors Total $ 1,104,000 92,200 914,000 94,000 1,267,000 1,464,800 4,895,050 90,000 128, 250 $10,049,300 $ 411,000 542,300 196,000 910,000 1,260,000 1,310,000 985,000 32,000 $10,049,300 $5,614,300 $5,614,300 As of December 31, 20X8, Sword had declared but not yet paid its fourth-quarter dividend of $5,000. Both companies use straight-line depreciation and amortization. Prince uses the fully adjusted equity method to account for its investment in Sword. Required: a. Compute the amount of the differential as of January 1, 20X8. Remaining differential $ 135,000 b. Verify the balance in Prince's Investment in Sword Distributors account as of December 31, 20X8. Balance in Investment in Sword Account $ 2,805,000 c. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar amount.) view transaction list transaction list No Event Accounts Debit Credit A 1 Additional paid-in capital Common stock Retained earnings Income from Sword Dist. Investment in Sword Dist. NCI in NA of Sword Dist. 1,260,000 910,000 1,310,000 135,000 2,711,250 903,750 B 2 Income from Sword Dist. 101,250 Dividends declared 7,500 93,750 Investment in Sword Dist. 3 33,750 Income from Sword Dist. Dividends declared 2,500 31,250 NCI in Nl of Sword Dist. D 4 Land 63,000 Goodwill 72,000 Income from Sword Dist. 135,000 E 5 25,200 Retained earnings Land 25,200 F 6 190,000 4,000 Building Depreciation expense Accumulated depreciation Other income 154,000 40,000 G 7 82,000 Other income Other expenses 82,000 H 8 Current payables 20,500 Current receivables 20,500 d. Prepare and complete a three-part worksheet for the preparation of consolidated financial statements for 20x8. (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.) Prince CORPORATION AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X8 Consolidation Entries Sword Prince Corp. DR Dist. CR Consolidated Income Statement Sales Other income (loss) Less: COGS Less: Depreciation & amort. expense Less: Other expenses Income from Sword Dist. Consolidated net income NCI in net income Controlling Interest in NI Statement of Retained Earnings Beginning balance 0 0 0 0 0 0 0 0 0 0 Net income Less: Dividends declared Ending Balance 0 0 0 0 0 Balance Sheet Cash Current receivables Inventory Land Buildings & equipment Less: Accumulated depr. Investment in Sword Dist. Goodwill Total Assets 0 0 0 0 0 Current payables Bonds payable Common stock Additional Paid-in capital Retained earnings NCI in NA of Sword Dist. Total Liabilities & Equity 0 0 0 0 0
