Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pop Corporation acquired 100 percent of Sun Corporation's outstanding voting common stock on Jan. 1 2016 for $660,000 cash. Sun's stockholder's equity on this date

Pop Corporation acquired 100 percent of Sun Corporation's outstanding voting common stock on Jan. 1 2016 for $660,000 cash. Sun's stockholder's equity on this date consisted of $300,000 capital stock and $300,000 retained earnings. The difference between the price paid by Pop and the Underlying equity acquired in Sun was allocated $30,000 to Sun's undervalued inventory and the remainder to patents with a 5 year write-off period. The undervalued inventory items were sold by Sun during 2016.

Pop made sales of $100,000 to Sun at a gross profit of $40,000 during 2016; during 2017, Pop made sales of $120,000 to Sun at a gross profit of $48,000. One half of the 2016 sales were inventoried by Sun at year-end 2016, and one fourth the 2017 sales were inventoried by Sun at year end 2017. Sun owned Pop $17,000 on account at Dec. 31, 2017.

The separate financial statements of Pop and Sun Corporations at end of year ended Dec 31, 2017 are summarized below in thousands:

Pop Sun

Sales 800 400

Income from sun 102 ----

Cost of sales (400) (200)

Depreciation expense (110) (40)

Other expenses (192) (60)

Net income 200 100

Beginning retained earnings 600 380

Less: Dividends (100) (50)

Retained earnings Dec 31, 2017 700 430

Cash 54 37

Receivables-net 90 60

Inventories 100 80

Other assets 70 90

Land 50 50

Buildings-net 200 150

Equipment-net 500 400

Investment in Sun 736 -----

Total Assets 1800 867

Accounts Payable 160 47

Other liabilities 340 90

Common Stock $10 par 600 300

Retained earnings 700 430

Total equities 1800 867

Prepare Consolidated Worksheet with adjustments for year end Dec 31, 2017 For POP

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial And Managerial Accounting

Authors: Jerry J Weygandt, Paul D Kimmel, Jill E Mitchell

4th Edition

1119752620, 978-1119752622

More Books

Students also viewed these Accounting questions