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Post Corporation paid $330,000 cash for 75% of the outstanding common stock of Soft Company on January 1, 2020. There was no control premium and

Post Corporation paid $330,000 cash for 75% of the outstanding common stock of Soft Company on January 1, 2020. There was no control premium and the fair value of the noncontrolling interest was $110,000 on January 1, 2020. Differences between book value and fair value of the net identifiable assets of Soft Company on January 1, 2020, were limited to the following:

Book value Fair value

Inventories $ 25,000 $ 35,000

Building (net) 175,000 173,000

Required:

(i) Prepare the working paper elimination entries E and R (in journal entry format) for Post Corporation and subsidiary on January 1, 2020.

(ii) Complete the following working paper:

Working paper for consolidated balance sheet on date of business combination, January 1, 2020

Post

Dr (Cr)

Soft

Dr (Cr)

Adjustments & Eliminations

Consolidated

Dr (Cr)

Debits

Credits

Cash

20,000

30,000

Inventories

170,000

25,000

Investment in Soft

330,000

Building (net)

230,000

175,000

Accounts payable

(120,000)

(110,000)

Common stock

(380,000)

(25,000)

Add. paid-in capital

(100,000)

(30,000)

Retained earnings

(150,000)

(65,000)

Total

0

0

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