• Prepare the consolidated financial statements at 12/31/X3 by placing the appropriate entries in their respective debit/credit column cells.
• Indicate, in the blank column cell to the left of the debit and credit column cells if the entry is a [C], [E], [A], [D] or [I]entry.
• Use Excel formulas to derive the Consolidated column amounts and totals.
• Using the Home key in Excel, go to the Styles area and highlight the [C], [E], [A], [D] or [I]entry cells in different shades.
• Review the grading rubric following this assignment, to understand how you will be graded on this assignment. Reach out to your instructor if you have questions about the assignment.

Assume that a parent company acquired 100% of a subsidiary on 1/1/X1. The purchase price was $175,000 in excess of the subsidiary's book value of net assets on acquisition date and the excess was assigned entirely to an unrecorded patent. The life of the patent is 10 years. Assume the subsidiary sells inventory to the parent. The parent ultimately sells the inventory to outside customers. The following relates to the years X2 and X3: Inventory Sales GP of unsold inventory Receivable (Payable) $103,300 $29,441 $41,320 X3 $87,900 $19,137 $27,986 X2 Consolidation Entries Parent Subsidiary Cr Consolidated Dr Income Statement: Sales 8,220,000 1,549,500 Cost of goods sold (5,754,000) (929,700) Gross profit 2,466,000 619,800 0 Equity income 189,126 0 Operating expenses (1,561,800) 1,093,326 (402,870) Net income 216,930 Statement of Retained Earnings: BOY retained earnings 4,129,728 800,575 Net income 1,093,326 216,930 Dividends (251,465) (28,201) EOY retained earnings 4,971,589 989,304 Balance Sheet: Assets Cash 500,842 C 555,910 1,052,160 C Accounts receivable 359,484 Inventory 0 1,594,680 461,751 Building, net 7,670,904 854,291 C Patent 0 Equity investment 0 1,314,788 12,188,442 2,176,368 Liabilities & stockholders' equity Accounts payable 615,678 184,948 Other current liabilities 253,191 758,475 Long-term liabilities 3,500,000 516,500 Common stock 1,343,970 0 103,300 0 APIC 998,730 129,125 Retained earnings 4,971,589 989,304 12,188,442 2,176,368 O O OO