Question
Poco Company purchased 80% of Solo Company's common stock on January 1, 2017, for $250,000. On December 31, 2017, the companies prepared the following trial
Poco Company purchased 80% of Solo Company's common stock on January 1, 2017, for $250,000. On December 31, 2017, the companies prepared the following trial balances:
Poco
Solo
Cash
161,500
125,000
Inventory
210,000
195,000
Investment in Solo Company
402,000
0
Land
75,000
150,000
Cost of Goods Sold
410,000
125,000
Other expense
100,000
80,000
Dividend Declared
30,000
15,000
Total Debits
1,388,500
690,000
Account Payable
154,500
35,000
Common Stock
200,000
150,000
Other contributed capital
60,000
35,000
Retained earnings, 1/1
50,000
60,000
Sales
760,000
410,000
Equity in Subsidiary Income
164,000
0
Total
1,388,500
690,000
Required:
Prepare a consolidated statements workpaper on December 31, 2017, using the equity method. Any difference between book value and the value implied by the purchase price relates to goodwill.
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Financial Accounting Fundamentals
Authors: John Wild
7th Edition
1260247864, 9781260247862
