Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $108,500. At that date, the noncontrolling interest had a fair value of $46,500 and Soda reported $70,000 of common stock outstanding and retained earnings of $30,000. The differential is assigned to buildings and equipment, which had a fair value $20,000higher than book value and a remaining 10-year life, and to patents, which had a fair value $35,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows:

Pop Corporation Soda Company

Item Debit Credit Debit Credit

Cash & Accounts Receivable $15,400 $21,600

Inventory 165,000 35,000

Land 80,000 40,000

Buildings & Equipment 340,000 260,000

Investment in Soda Company 109,600

Cost of Goods Sold 186,000 79,800

Depreciation Expense 20,000 15,000

Interest Expense 16,000 5,200

Dividends Declared 30,000 15,000

Accumulated Depreciation $140,000 $80,000

Accounts Payable 92,400 35,000

Bonds Payable 200,000 100,000

Bond Premium 1,600

Common Stock 120,000 70,000

Retained Earnings 127,900 60,000

Sales 260,000 125,000

Other Income 13,600

Income from Soda Company 8,100

$962,000 $962,000 $471,600 $471,600

On December 31, 20X2, Soda purchased inventory for $32,000 and sold it to Pop for $48,000. Pop resold $27,000 of the inventory (i.e., $27,000 of the $48,000 acquired from Soda)during 20X3 and had the remaining balance in inventory at December 31, 20X3.

During 20X3, Soda sold inventory purchased for $60,000 to Pop for $90,000, and Pop resold all but $24,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $15,000 to Soda for $30,000. Soda sold all but $7,600 of the inventory prior to December 31, 20X3. Assume Pop uses the fully adjusted equity method, that both companies use straight-line depreciation, and that no property, plant, and equipment has been purchased since the acquisition.

Required:

a. all consolidation entries needed to create full set of consolidated financial statements at December 31, 20X3, for Pop and Soda.

Income Statement Sales $ 260.000 0 $ 125.000 0 $ 385.000 Other Income 13.600 0 13.600 Less: COGS {186,000} a {70,800} 0 {265,800} Less: Depreciation Expense (20,000} 0 {15,000} 0 (35,000} Less: Inteiest Expense (16,000} 0 {5,200} 0 (21,200} Less: Amortization Expense Income from Soda Company 8100 o 8.100 Consolidated Net Income 59.700 25.000 84.700 NCI in Net Income Controlling Interest in Net Income $ 59.700 8 25.000 SB 84.700 Statement of Retained Earnings Beginning balance 35 127.000 0 $ 60.000 0 $ 187.900 Net income 59.700 25.000 84.700 Less: Dividends declared {30,000} a {15,000} a (45,000} Ending Balance 3 157.600 $ 70.000 SB 227.600 Balance Sheet Cash and Accounts Receivable $ 15.400 0 $ 21.600 0 $ 37.000 Inventor}:r 165.000 0 35.000 0 200.000 Land 80.000 0 40.000 0 120.000 Buildings 3. Equipment 340.000 0 280.000 0 600.000 Less: Accumulated Depreciation (140,000) (80,000) (220,000) Investment in Soda Company 109,600 V 109,600 Patents Total Assets $ 570,000 276,600 $ 0 0 846,600 Accounts Payable $ 92,400 $ 35,000 V $ 127,400 Bonds Payable 200,000 100,000 V 300,000 Bonds Premium 1,600 V 1,600 Common Stock 120,000 70,000 V 190,000 Retained Earnings 157,600 70,000 227,600 NCI in NA of Soda Company Total Liabilities & Equity $ 570,000 $ 276,600 0 0 846,600No Entry Accounts Debit Credit A 1 Common stock 70,000 Retained earnings V 60,000 Income from Soda Company NCI in NI of Soda Company v Dividends declared Investment in Soda Company NCI in NA of Soda Company B 2 Amortization expense Depreciation expense Income from Soda Company NCI in NI of Soda Company C 3 Buildings and equipment Patents V Accumulated depreciation V Income from Soda Company X NCI in NI of Soda Company X D 4 Accumulated depreciation V Buildings and equipment VE 5 NCI in NA of Soda Company Investment in Soda Company Cost of goods sold F 6 NCI in NA of Soda Company Investment in Soda Company Inventory G 7 Sales Cost of goods sold Inventory