Plexi Company purchased 85% of the outstandingcommon stock of Sesnor Company on January 1, 209 for ss,moo NOTE COST METHOD USED BY PARENT Credit Investment in Subsidiary-Sesnor 5,700,000 in Jan. 1, ZO 9 $5,700,000 The SesnorCompanybatndutettonw09and unna are as follows: Fair Value 120,000 $ 260,000 350,000 $ 450,000 1,275,000 950,00o 3,200,000 $ 3,450,000 $1,000000 1,000,000 250,000 $120,000 $350,000 $1,275,000 $ 3,200,000 $2,500,000 Cash Accounts Receivable Net Plant Assets $ 1,500,000 Other Assets Total Assets Accounts Payable ies 1,375,000 1,150,000 500,000 $325,000 $ 1,375,000 $750,000 Other Uabilit $ 250,000 Total Uabilities Common Stock (Par $1) APIC Retained Eamings 100,000 100,000 3,070,000 3,885,000 Total Equity Total Liabilities &Equity945,000$6360.000 85%Ownership 85% 15% 100% NCI lied $5,700,000 $ 1,005,882 6,705,882 $ 4,070,000 2,635,882 1,500,000 37,500 250,000 S 1,385,882 $1,385,882 Fair Value Given Up Book Value Received $ 3,459,500 610,500 395,382 1,275,000 $ 225,000 7,500 207,882 207,882 Difference Land Other Liabilities $ 2,240,500 $ $ 212,500 $ $ 1,178,000 $ $ 1,178,000 $ Goodwill Balance During 2012, Sesnor Company dedared 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 entriesjTHAT 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 en Debi investment in Subsidiary-Sesnor Company Credit 110,500 Retained Earnings 1/1 Current Year- Parent $110,500 In the space below d in detail how the $110,500 (abo What does the following entry accomplish in the workpaper? Credit Dividend Income 212,500 $212,500 Dividend Declared -Sub-Sesnor Co 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 ow how the credit to Investment in Subsidiary and NCI (above) is calculated in the space provided below mplete the entry to allocate the difference below. 12 Workpaper Entry (3) Debit Plexi Co. and Subsidiary For the Year Ended December 31, 2012 Debit 9,500,000 5,500,000 S 212,500 s 212,500 () $ 9,712,500$ 5,500,000 Dividend Income $15,000,000 Total Revenve $15,000,00 inventory 1i $750,000850,000 8100,000 $ 4 100,000 1,600,000 13,800,000 $11,975,00D Available for Sale $8.850,000 $4,950,000 $ 7,975,000$ 4,000,000 $ 580,000275,000 inventory 12/31 Cost of Goods Sold 5 875000 9 Selling Expense Other Expenses $ 715,000 Total Expenses Net income to Retained Earnings $1455,000 2,500 te $140,250 in the umn ca the Retained Earnings Statement (below) and explain why dividend declared for Sesnor Co. is n the consolidated balance Consolidated Debit Credit Balance Retained Earnings 1/1 Beg Of Current Year 3,850,000 3,960,500 $110,500 (0) Plexi Co. Sesnor Co. 3,200,000 3200,000 '(2) s 140,250 $ 1,314,750 Net Income from above Divident Declared 450,000 $450,000 Plexi Co. Sesnor Co. 212,500 ( 37,500 $ 250,000 Retained Earnings 12/31 End of Current Year 4132 500 53.85,0003412,500 $ 323,000 102,750 $ 4,825,250 Complete the balance sheet. Parent SubsidiaryWorkeager Eliminationl Entries PlexiCo SesnorCo. Consolidated sdsNCBalane Credit Assets Cash Accounts Receivable Inventory 12/31 s 450,000260,000 $ 750,000$450,000 $ 875,000 950,000 $5,700,000 Investment in Sub-Sesnor Co. Net Plant Assets 3,850,000 $ 3,450,000 $ 250,000 $ 1,000,000 $150,000 250,000 Other Assets Difference Total Assets 12,025,000 $ 6,360,000 Liabilities Accounts Payable Other Liabilities 4,244,50o 1,150,000 998,000 S Total Uabilities s 5,242,500 1475,000 Equity Common Stock $250,000 Plexi Co. Sesnor Co. 100,000 APIC Plexi Co. $ 2,400,000 $900,000 $ 4,132,500 3,885,000 Sesnor Co. Retained Earnings from above 1/1 Noncontrolling Interest 12/31 Noncontrolling Interest Total Equity 6,782,500S 4,885000 S 12,025,000 6,360,000 Total Liabilities and Equity