Pot Incorporated acquired all Seed Incorporated's outstanding $28 par common stock on December 31, 20X3, in exchange for 40,000 shares of its $28 par common stock Pot's common stock closed at $57 50 per share on a national stock exchange on December 31, 20X3 Both corporations continued to operate as separate businesses maintaining separate accounting records with years ending December 31 On December 31, 20X4, after year end adjustments and the closing of nominal accounts, the companies had condensed balance sheet accounts (below) Pot IncorporatedSeed IncorporatedAssetsCash$ 827,000$ 342,000Accounts and Other Receivables2,152,000838,000Inventories2,314,0001,046,000Land654,000308,000Depreciable Assets (net)4,581,0001,997,000Investment in Seed Incorporated2,655,000Long Term Investments and Other Assets877,000401,000Total Assets$ 14,060,000$ 4,932,000Liabilities and Stockholders' EquityAccounts Payable and Other Current Liabilities$ 2,457,000$ 1,139,000Long Term Debt1,888,0001,285,000Common Stock, $28 Par Value3,315,0001,120,000Additional Paid In Capital1,180,000178,000Retained Earnings5,220,0001,210,000Total Liabilities and Stockholders' Equity$ 14,060,000$ 4,932,000 Additional Information Pot uses the equity method of accounting for its investment in Seed On December 31, 20X3, Seed's assets and liabilities had fair values equal to the book balances with the exception of land, which had a fair value of $455,000 Seed had no land transactions in 20X4 On June 15, 20X4, Seed paid a cash dividend of $6 per share on its common stock On December 10, 20X4, Pot paid a cash dividend totaling $260,000 on its common stock On December 31, 20X3, immediately before the combination, the stockholders' equity balance was Pot IncorporatedSeed IncorporatedCommon Stock$ 2,195,000$ 1,120,000Additional Paid In Capital1,647,000178,000Retained Earnings3,986,000855,000$ 7,828,000$ 2,153,000 The 20X4 net income amounts according to the separate books of Pot and Seed were $899,000 (exclusive of equity in Seed's earnings) and $595,000, respectively Required Prepare a consolidated balance sheet worksheet for Pot and its subsidiary, Seed, for December 31, 20X4 A formal consolidated balance sheet is not required Note 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

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 26, 2024

Pot Incorporated acquired all Seed Incorporated's outstanding $28 par common stock on December 31, 20X3, in exchange for 40,000 shares of its $28 par common

Pot Incorporated acquired all Seed Incorporated's outstanding $28 par common stock on December 31, 20X3, in exchange for 40,000 shares of its $28 par common stock. Pot's common stock closed at $57.50 per share on a national stock exchange on December 31, 20X3. Both corporations continued to operate as separate businesses maintaining separate accounting records with years ending December 31.

On December 31, 20X4, after year-end adjustments and the closing of nominal accounts, the companies had condensed balance sheet accounts (below).

Pot IncorporatedSeed IncorporatedAssetsCash$ 827,000$ 342,000Accounts and Other Receivables2,152,000838,000Inventories2,314,0001,046,000Land654,000308,000Depreciable Assets (net)4,581,0001,997,000Investment in Seed Incorporated2,655,000Long-Term Investments and Other Assets877,000401,000Total Assets$ 14,060,000$ 4,932,000Liabilities and Stockholders' EquityAccounts Payable and Other Current Liabilities$ 2,457,000$ 1,139,000Long-Term Debt1,888,0001,285,000Common Stock, $28 Par Value3,315,0001,120,000Additional Paid-In Capital1,180,000178,000Retained Earnings5,220,0001,210,000Total Liabilities and Stockholders' Equity$ 14,060,000$ 4,932,000

Additional Information

Pot uses the equity-method of accounting for its investment in Seed.
On December 31, 20X3, Seed's assets and liabilities had fair values equal to the book balances with the exception of land, which had a fair value of $455,000. Seed had no land transactions in 20X4.
On June 15, 20X4, Seed paid a cash dividend of $6 per share on its common stock.
On December 10, 20X4, Pot paid a cash dividend totaling $260,000 on its common stock.
On December 31, 20X3, immediately before the combination, the stockholders' equity balance was:

Pot IncorporatedSeed IncorporatedCommon Stock$ 2,195,000$ 1,120,000Additional Paid-In Capital1,647,000178,000Retained Earnings3,986,000855,000$ 7,828,000$ 2,153,000

The 20X4 net income amounts according to the separate books of Pot and Seed were $899,000 (exclusive of equity in Seed's earnings) and $595,000, respectively.

Required:

Prepare a consolidated balance sheet worksheet for Pot and its subsidiary, Seed, for December 31, 20X4. A formal consolidated balance sheet is not required

Note: 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.