PLEASE MAKE A WORKING PAPER ELIMINATION IN JOURNAL ENTRY FORM. Ex is attached for the format. please show all work

190 Chapter 4 32. Father, Inc., buys 80 percent of the outstanding common stock of Sam Corporation on January 1, excel 2009, for $680,000 cash. At the acquisition dato, Sam's total fair value was assessed at $850,000 although Sam's book value was only $600,000. Also, several individual items on Sam's financial records had fair values that differed from their book values as follows: NPE Book Value Fair Value In a journal entry Land $ 60,000 $ 225,000 Buildings and equipment 275,000 250,000 Format= Total Dr/CRO-year remaining life) Copyright 100,000 200,000 Notes payable (due in 8 years) (130,000) (120,000) For internal reporting purposes, Father, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2009, for both companies. Using the acquisition method, determine consolidated balances for this business combination (through either individual computations or the use of a worksheet), Father Sam Revenues 5(1.360,000) $(540,000) Cost of goods sold 700,000 385,000 Depreciation expense 260,000 10,000 Amortization expense -0- 5,000 Interest expense 44,000 5,000 Equity in income of Sam (105,000) Net Income $ (461,000), 5(135,000 135 Retained earnings, 1/1/09 $(1,265,000) $(440,000) Net income (above) (461,000) (135,000) Dividends paid 260,000 65,000 Retained earnings, 12/31/09 5(1.466,000) $(510,000) Current assets $ 965,000 $ 528,000 Investment in Sam 733,000 --0- Land 292,000 60,000 Buildings and equipment (net) 877,000 265,000 Copyright -0- 95,000 Total assets $ 2,867,000 $948.000 Accounts payable 5 (191,000) 5(148,000) Notes payable (460,000) (130,000) Common stock (300,000) (100,000) Additional pald-in capital (450,000) (60,000) Retained earnings (above) (1.466,000) (510.000) Total liabilities and equities $(2.867,000) S(948,000) No Cindy Working Paper Elimination - Journal Entries Debit Credit Accounts Parent Journal Entry Common stock Additional paid-in capital Retained earnings Investment in Sam Corp NCI in Sam Corp 100,000 60,000 440,000 480,000 (100,000 + 60,000 $440,000 = 600,000 x 80%) 120,000 (600,000.480,000) 165,000 100,000 10,000 0 25,000 (250,000/10 years) 200,000 (250,000 X 80%) 50,000 (250,000 x 20%) 105,000 Consolidation Entry A Land (225.000 - 60,000) Copyright (200,000 - 100,000) Notes Payable (130,000 - 120,000) Goodwill (680,000/ 80%-850,000 - 850,00 Buildings and equipment Investment in Sam Corp NCI in Sam Corp Consolidation Entry! Equity of Sam's income Investment in Sam Corp Consolidation Entry D Investment in Sam Corp. (65,000 x 80%) Dividends paid Consolidation Entry E Ammortization expense Interest expense Buildings and equipment Depreciation expense Copyright Notes Payable 105,000 52.000 52,000 5,000 1,250 2,500 1.250 5,000 2,500 TOTAL 1,040,750 1,040,750