PLEASE LOOK AT THE ATTACHED DOCUMENT TO SEE THE EXERCISE CORRECTLY WRITING DOWN.

Problem 8-6 (LO 4) Worksheet, direct and indirect holding, intercompany merchandise, machine.

The following diagram depicts the relationships among Mary Company, John Company, and Joan Company on December 31, 2018:

Mary Company purchases its interest in John Company on January 1, 2016, for $204,000. John Company purchases its interest in Joan Company on January 1, 2017, for $75,000. Mary Company purchases its interest in Joan Company on January 1, 2018, for $72,000. All investments are accounted for under the equity method. Control over Joan Company does not occur until the January 1, 2018, acquisition. Thus, a D&D schedule will be prepared for the investment in Joan as of January 1, 2018.

The following stockholders? equities are available:

John Company December 31,

Joan Company December 31,

2015

2016

2017

Common stock ($10 par)

$150,000

Common stock ($10 par)

$100,000

$100,000

Paid-in capital in excess of par

75,000

Retained earnings

75,000

50,000

80,000

Total equity

$300,000

$150,000

$180,000

On January 2, 2018, Joan Company sells a machine to Mary Company for $20,000. The machine has a book value of $10,000, with an estimated life of five years and is being depreciated on a straight-line basis.

John Company sells $20,000 of merchandise to Joan Company during 2018 to realize a gross profit of 30%. Of this merchandise, $5,000 remains in Joan Company?s December 31, 2018, inventory. Joan owes John $3,000 on December 31, 2018, for merchandise delivered during 2018.

Trial balances of the three companies prepared from general ledger account balances on December 31, 2018, are as follows:

Mary Company

John Company

Joan Company

Cash

62,500

60,000

30,000

Accounts Receivable

200,000

55,000

30,000

Inventory

360,000

80,000

50,000

Investment in John Company

270,000

Investment in Joan Company

86,000

107,500

Property, Plant, and Equipment

2,250,000

850,000

350,000

Accumulated Depreciation

(938,000)

(377,500)

(121,800)

Intangibles

15,000

Accounts Payable

(215,500)

(61,000)

(22,000)

Accrued Expenses

(12,000)

(4,000)

(1,200)

Bonds Payable

(500,000)

(300,000)

(100,000)

Common Stock ($5 par)

(500,000)

Common Stock ($10 par)

(150,000)

Common Stock ($10 par)

(100,000)

Paid-In Capital in Excess of Par

(700,000)

(75,000)

Retained Earnings, January 1, 2018

(290,000)

(130,000)

(80,000)

Sales

(1,800,000)

(500,000)

(300,000)

Gain on Sale of Equipment

(10,000)

Subsidiary Income

(58,000)

(20,000)

Cost of Goods Sold

1,170,000

350,000

180,000

Other Expenses

525,000

100,000

90,000

Dividends Declared

75,000

15,000

5,000

Totals

0

0

0

Required

Prepare the worksheet necessary to produce the consolidated financial statements of Mary Company and its subsidiaries as of December 31, 2018. Include the determination and distribution of excess and income distribution schedules. Any excess of cost is assumed to be attributable to goodwill.

Problem 8-6 (LO 4) Worksheet, direct and indirect holding, intercompany merchandise, machine. The following diagram depicts the relationships among Mary Company, John Company, and Joan Company on December 31, 2018: Mary Company purchases its interest in John Company on January 1, 2016, for $204,000. John Company purchases its interest in Joan Company on January 1, 2017, for $75,000. Mary Company purchases its interest in Joan Company on January 1, 2018, for $72,000. All investments are accounted for under the equity method. Control over Joan Company does not occur until the January 1, 2018, acquisition. Thus, a D&D schedule will be prepared for the investment in Joan as of January 1, 2018. The following stockholders' equities are available: John Company December 31, 2015 $150,000 Common stock ($10 par) Common stock ($10 par) Paid-in capital in excess of 75,000 par Retained earnings 75,000 Total equity $300,000 Joan Company December 31, 2016 2017 $100,000 $100,000 50,000 $150,000 80,000 $180,000 On January 2, 2018, Joan Company sells a machine to Mary Company for $20,000. The machine has a book value of $10,000, with an estimated life of five years and is being depreciated on a straight-line basis. John Company sells $20,000 of merchandise to Joan Company during 2018 to realize a gross profit of 30%. Of this merchandise, $5,000 remains in Joan Company's December 31, 2018, inventory. Joan owes John $3,000 on December 31, 2018, for merchandise delivered during 2018. Trial balances of the three companies prepared from general ledger account balances on December 31, 2018, are as follows: Cash Accounts Receivable Inventory Investment in John Company Investment in Joan Company Property, Plant, and Equipment Accumulated Depreciation Intangibles Accounts Payable Accrued Expenses Bonds Payable Common Stock ($5 par) Common Stock ($10 par) Common Stock ($10 par) Paid-In Capital in Excess of Par Retained Earnings, January 1, 2018 Sales Gain on Sale of Equipment Subsidiary Income Cost of Goods Sold Other Expenses Dividends Declared Totals Mary Company 62,500 200,000 360,000 270,000 86,000 2,250,000 (938,000) 15,000 (215,500) (12,000) (500,000) (500,000) John Company 60,000 55,000 80,000 Joan Company 30,000 30,000 50,000 107,500 850,000 (377,500) 350,000 (121,800) (61,000) (4,000) (300,000) (22,000) (1,200) (100,000) (150,000) (100,000) (700,000) (290,000) (1,800,000) (75,000) (130,000) (500,000) (58,000) 1,170,000 525,000 75,000 0 (20,000) 350,000 100,000 15,000 0 (80,000) (300,000) (10,000) 180,000 90,000 5,000 0 Required Prepare the worksheet necessary to produce the consolidated financial statements of Mary Company and its subsidiaries as of December 31, 2018. Include the determination and distribution of excess and income distribution schedules. Any excess of cost is assumed to be attributable to goodwill