Plexi Company purchased 85% of the outstanding common stock of Senor Company on January 1, 2009 for $57000. NOTE: COST METHOD USED BY PARENT Debit Jan. 1, 2009 Investment in Subsidiary-Sesnor 5,700,000 $ 5,700,000 The Sesnor Company balance aheet on 1/1/09 and 12/31/12 are as follows: Fair Value 120,000 $260,000 350,000 $ 450,000 1,275,000 $ 950,000 3,200,000 $ 3,450,000 1,000,000 1,000,000 250,000 120,000 $ 350,000 $1275,000 3,200,000 $2,500,000 Cash Accounts Receivable Net Plant Assets Other Assets $ 1,500,000 Total Assets 5945,000 S 6360,000 Accounts Payable Other Uabilities 1,375,000 $ 1,150,000 500000 $325,000 875,000$ 1475,000 $1,375,000 $750,000 $ 250,000 Total Liabilities Common Stock (Par $1) 100,000 $ 100,000 900,000 900,000 Retained Eanings 3,070,000 3,885,000 885.000 Total Equity Total iablites & Equity 5.945,000 6360,000 C 85% ownership 85% 15% NCI 100% Total Implied $ 5,700,000 1,005,882 6,705,882 $3,459,500 610,500 4,070,000 $ 2,635,882 s 1,275,000 225,000 $ 1,500,000 $250,000 $ 1,178,000 207,882 1,385,882 S 1,385,882 Fair Value Given Up Book Value Received Difference Land Other Liabilities 2,240,500 $ 212,500 $ 1,178,000 $ 395,382 37,500 207,882 Goodwill Balance During 2012, Sesnor Company declared dividends in the amount of During 2012, Sesnor Company had net income in the amount of 250,000 212,500 Sesnor Company Retained Earnings as of 12/31/2011 was 3,200,000 ) PREPARE THE WORKPAPER (and related workpaper entries)THAT WOULD BE MADE IN THE PREPARATION OF THE CONSOUDATED FINANCIAL STATEMENTS ON DECEMBER 31, 2012 Cost Method-After Year of Acquisition the following workpaper entries are made Debit Investment in Subsidiary -Sesnor Company 110,500 Retained Earnings 1/1Current Year- Parent $110,500 What does the following entry accomplish in the workpaper? Dividend Income $212,500 Dividend Declared-Sub-Sesnor Co. $ 212,500 Review the entry below. Workpaper Entry (2) Common Stock-Sesnor Co APIC-Sesnor Co. Retained Earnings- Sesnor Co Difference Debit 100,000 900,000 $3,200,000 $2,635,882 Investment in Subsidiary -Sesnor Company NCI $5,810,500 $ 1,025,382 w how the credit to Investment in Subsidiary and NCI (above) is calculated in the space provided below Complete the entry to allocate the difference below Workpaper Entry (3) Debit Plexi Co. and Subsidiary Consolidated Statements Workpaper For the Year Ended December 31, 2012 Parent Subsidary Workar(Eliminationl Entiles Consolidated Plexi Co. SesnorCo Credit NGan Debit Sales Dividend Income $ 9,500,000 5,500,000 S 212,500 $ $15,000,000 s212,500 Total Revenue $ 9,712,500 $5,500,000 $15,000,000 COGS: Inventory 141 $ 750,000 $ 850,000 Available for Sale Inventory 12/31 Cost of Goods Sold 8100000 4100,00 $ 8,8s0,000$4950,000 1,600,000 $12,200,000 $13,800,000 s 7,975,000 4,000,000 $425,00D $ 290,000 $580,000 S $8,980,000$ 4565,000 Selling Expense Other Expenses $11,975,000 $ 715,000 Total Expenses $855, $13,545,000 Net/Consolidated income Noncontrolling Interest In Consolidated Inc Net Income to Retained Earnings $1,455,000 73 8500 2,2.309 1830 338429 5 732500 S 212,50 S 140,250 140,250 140,250 1314,750 5Demonstrate (below) how is the $140,250 in the NCI column calculated? Review the Retained Earnings Statement (below) and explain why dividend declared for Sesnor Co. is $ in the consolidated balance Workpaper (Elimination) Entries Consolidate Parent Subsidiary Plexi Co.Sesnor Co Debit lb Retained Earnings 1/1 Beg. Of Current Year $ 110,500 (0) 3,960,50 Plexi Co. Sesnor Co. $ 3,850,000 5 1,0003,20000 1a) 212,500S 140,250 s 1,314,75 Net Income from above $ 732,500 $ 935,000 Divident Declared $ 450,0 $ 450,000 Plexi Co. Sesnor Co. 250,000 $ 212,500 (137,500 S Retained Earnings 12/31 End of Current Year 4,132, 500 3885,000 3,412,500323,000 Complete the balance sheet. Workpaper (Elimination) Entries Consolida Parent Subsidiary Plexio SesnorCo CreditNCI Balance Assets Cash Accounts R Inventory@ 12/31 Investment in Sub-Sesnor Co. Net Plant Assets $ 450,000 2 $750,000450,000 $875,000 $950,000 $ 5,700,000 $ $3,850,000 3,450,000 $250,000 1,000,000 260,000 150,000 $ 250,000 Other Assets Goodwill Difference Total Assets Liabilities Accounts Payable Other Uabilities 4,244,500 1,150,000 325,000 $ 998,000 $ Total Liabilities $5,242,5001,475,000 Equity Common Stock $250,000 Plexi Co. Sesnor Co. 100,000 2,400,000 Plexi Co. Sesnor Co. Earnings from above $ 900,000 $ 4,132,500 $ 3,885,000 Retained 1/1 Noncontrolling Interest 12/31 Noncontrolling Interest Total Equity 6,782,500 S 4,885,000 Total Liabilities and Equity S 12,025,000$ 6,360,000