Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $112,700. At that date, the noncontrolling interest had a fair value of $48,300 and Soda reported $71,000 of common stock outstanding and retained earnings of $31,000. The differential is assigned to buildings and equipment, which had a fair value $28,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $31,000 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: Soda Company Debit Credit $ 22,600 36,000 41,000 261,000 Item Cash & Accounts Receivable Inventory Land by Buildings & Equipment Investment in Soda Company Cost of Goods Sold Depreciation Expense Interest Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Bond Premium Common Stock Retained Earnings Sales Other Income Income from Soda Company Pop Corporation Debit Credit $ 16,400 166,000 81,000 350,000 117,200 187,000 20,000 17,000 31,000 $141,000 93,400 219, 250 80,800 15,000 6,200 16,000 $ 85,000 36,000 94,000 1,600 71,000 61,000 130,000 121,000 128, 900 261,000 10,600 10,450 $985,600 $985,600 $478,600 $478,600 On December 31, 20X2, Soda purchased inventory for $31,500 and sold it to Pop for $45,000. Pop resold $30,000 of the inventory (i.e., $30,000 of the $45,000 acquired from Soda) during 20x3 and had the remaining balance in inventory at December 31, 20X3. During 20X3, Soda sold inventory purchased for $56,000 to Pop for $80,000, and Pop resold all but $25,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $15,000 to Soda for $30,000. Soda sold all but $7,800 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. Prepare all consolidation entries needed to prepare a full set of consolidated financial statements at December 31, 20X3, for Pop and Soda. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is complete but not entirely correct. No Entry Accounts Debit Credit A 1 Common stock 71,000 61,000 10,450 X 0 X Retained earnings Income from Soda Company NCI in Nl of Soda Company Dividends declared Investment in Soda Company NCI in NA of Soda Company 16,000 117,200 OOOOOOO OOOO 0 B 2 Amortization expense 0 X 2,800 Depreciation expense Income from Soda Company NCI in NI of Soda Company 10,450 X 0 X 3 28,000 0 X Buildings and equipment Patents Accumulated depreciation Investment in Soda Company NCI in NA of Soda Company 85,000 X 0 X 0 X D 4 0 X Accumulated depreciation Buildings and equipment 261,000 X E 5 0X Investment in Soda Company NCI in NA of Soda Company Cost of goods sold 0 X 80,800 X F 6 0 X Investment in Soda Company NCI in NA of Soda Company Inventory 0 36,000 G 7 Sales 130,000 X Cost of goods sold Inventory 80,800 x 36,000 X b. Prepare a three-part consolidation worksheet for 20X3. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) * Answer is complete but not entirely correct. POP CORPORATION & SUBSIDIARY Consolidated Financial Statement Worksheet For 20X3 Consolidation Entries Pop Corp. Soda Co. DR CR Consolidated $ 130,000 $ 134,000 $ 261,000 $ 10,600 (187.000) (20,000) (17,000) 130,100 X (80,800) (15,000) (6,200) 2,900 X 257,000 10,600 (137,700) (37,900) (23,200) (7.600) 1,505 62,705 (5,655) 57,050 10,450 58,050 28,000 7,600 X 16,295 160,795 8,805 X 169,600 7,350 X 137,450 3,150 140,600 $ 58,050 $ 28,000 $ S $ IS $ 61,000 169,600 140,600 128,900 $ 58,050 (31,000) 155,950 61,000 $ 28,000 (16,000) 73,000 $ 128,900 57,050 (31,000) 154,950 16,000 156,600 Is 230,600 $ Income Statement Sales Other Income Less: COGS Less: Depreciation Expense Less: Interest Expense Less: Amortization Expense Income from Soda Company Consolidated Net Income NCI in Net Income Controlling Interest in Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Cash and Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Soda Company Patents Total Assets Accounts Payable Bonds Payable Bonds Premium Common Stock Retained Earnings NCI in NA of Soda Company Total Liabilities & Equity $ $ 39,000 181,300 20,700 X 16,400 $ 166,000 81,000 350,000 (141,000) 117,000 X 22,600 36.000 41,000 261,000 (85,000) 29,000 45,000 X 45,000 X 5,800 X 128,995 > 122,000 595,000 (186,800) (235) 22,800 773,065 11,760 X 22,800 108,560 $ $ S 200,495 $ $ 589,400 $ 93,400$ 219,250 $ 275,600 36,000 94,000 1,600 71,000 73,000 121,000 129,400 313,250 1,600 121,000 154,950 52,065 772,265 71,000 230,600 5,040 306,640 155,950 156,600 57,105 X 213,705 $ 589,600 $ 275,600 $ S IS Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $112,700. At that date, the noncontrolling interest had a fair value of $48,300 and Soda reported $71,000 of common stock outstanding and retained earnings of $31,000. The differential is assigned to buildings and equipment, which had a fair value $28,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $31,000 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: Soda Company Debit Credit $ 22,600 36,000 41,000 261,000 Item Cash & Accounts Receivable Inventory Land by Buildings & Equipment Investment in Soda Company Cost of Goods Sold Depreciation Expense Interest Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Bond Premium Common Stock Retained Earnings Sales Other Income Income from Soda Company Pop Corporation Debit Credit $ 16,400 166,000 81,000 350,000 117,200 187,000 20,000 17,000 31,000 $141,000 93,400 219, 250 80,800 15,000 6,200 16,000 $ 85,000 36,000 94,000 1,600 71,000 61,000 130,000 121,000 128, 900 261,000 10,600 10,450 $985,600 $985,600 $478,600 $478,600 On December 31, 20X2, Soda purchased inventory for $31,500 and sold it to Pop for $45,000. Pop resold $30,000 of the inventory (i.e., $30,000 of the $45,000 acquired from Soda) during 20x3 and had the remaining balance in inventory at December 31, 20X3. During 20X3, Soda sold inventory purchased for $56,000 to Pop for $80,000, and Pop resold all but $25,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $15,000 to Soda for $30,000. Soda sold all but $7,800 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. Prepare all consolidation entries needed to prepare a full set of consolidated financial statements at December 31, 20X3, for Pop and Soda. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is complete but not entirely correct. No Entry Accounts Debit Credit A 1 Common stock 71,000 61,000 10,450 X 0 X Retained earnings Income from Soda Company NCI in Nl of Soda Company Dividends declared Investment in Soda Company NCI in NA of Soda Company 16,000 117,200 OOOOOOO OOOO 0 B 2 Amortization expense 0 X 2,800 Depreciation expense Income from Soda Company NCI in NI of Soda Company 10,450 X 0 X 3 28,000 0 X Buildings and equipment Patents Accumulated depreciation Investment in Soda Company NCI in NA of Soda Company 85,000 X 0 X 0 X D 4 0 X Accumulated depreciation Buildings and equipment 261,000 X E 5 0X Investment in Soda Company NCI in NA of Soda Company Cost of goods sold 0 X 80,800 X F 6 0 X Investment in Soda Company NCI in NA of Soda Company Inventory 0 36,000 G 7 Sales 130,000 X Cost of goods sold Inventory 80,800 x 36,000 X b. Prepare a three-part consolidation worksheet for 20X3. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) * Answer is complete but not entirely correct. POP CORPORATION & SUBSIDIARY Consolidated Financial Statement Worksheet For 20X3 Consolidation Entries Pop Corp. Soda Co. DR CR Consolidated $ 130,000 $ 134,000 $ 261,000 $ 10,600 (187.000) (20,000) (17,000) 130,100 X (80,800) (15,000) (6,200) 2,900 X 257,000 10,600 (137,700) (37,900) (23,200) (7.600) 1,505 62,705 (5,655) 57,050 10,450 58,050 28,000 7,600 X 16,295 160,795 8,805 X 169,600 7,350 X 137,450 3,150 140,600 $ 58,050 $ 28,000 $ S $ IS $ 61,000 169,600 140,600 128,900 $ 58,050 (31,000) 155,950 61,000 $ 28,000 (16,000) 73,000 $ 128,900 57,050 (31,000) 154,950 16,000 156,600 Is 230,600 $ Income Statement Sales Other Income Less: COGS Less: Depreciation Expense Less: Interest Expense Less: Amortization Expense Income from Soda Company Consolidated Net Income NCI in Net Income Controlling Interest in Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Cash and Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Soda Company Patents Total Assets Accounts Payable Bonds Payable Bonds Premium Common Stock Retained Earnings NCI in NA of Soda Company Total Liabilities & Equity $ $ 39,000 181,300 20,700 X 16,400 $ 166,000 81,000 350,000 (141,000) 117,000 X 22,600 36.000 41,000 261,000 (85,000) 29,000 45,000 X 45,000 X 5,800 X 128,995 > 122,000 595,000 (186,800) (235) 22,800 773,065 11,760 X 22,800 108,560 $ $ S 200,495 $ $ 589,400 $ 93,400$ 219,250 $ 275,600 36,000 94,000 1,600 71,000 73,000 121,000 129,400 313,250 1,600 121,000 154,950 52,065 772,265 71,000 230,600 5,040 306,640 155,950 156,600 57,105 X 213,705 $ 589,600 $ 275,600 $ S IS