Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $200,000. The trial balances for the two companies on December 31, 20X7, included the following amounts:
companles on December 31, 20X7, Included the following amounts: Sword Company Debit Credit $ 41,600 60, cee 119,000 36, eee 15e,eee Item Cash Accounts Receivable Inventory Land Buildings and Equipment Investment in Sword Company Cost of Goods Sold Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Common Stock Retained Earnings Sales Income from Sword Company Prince Corporation Debit Credit 84,000 55,00 178,000 82,00 497, eee 240,00 497, eee 22,00 68,000 62,00 $ 143,000 61, eee 189,000 285,000 346, eee 696,eee 65,000 $1,785,eee $1,785,eee 255,000 12,eee 68,000 25,eee $ 60,000 27,000 134, eee 48,00 94,000 403,00 $766, $ 766, Additional Information 1. On January 1, 20X7, Sword reported net assets with a book value of $142,000. A total of $25,000 of the acquisition price is applied to goodwill, which was not Impalred In 20X7. 2. Sword's depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment. 3. Prince used the equity-method in accounting for its Investment In Sword. 4. Detailed analysis of recevables and payables showed that Sword owed Prince $22,000 on December 31, 20x7. Required: a. Prepare all journal entries recorded by Prince with regard to its Investment In Sword during 20X7. (If no entry is required for a transaction/event, select "No journal entry required" In the first account field.) View transaction list Journal entry worksheet Record the initial investment in Sword Co. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal b. Prepare all consolidating entries needed to prepare a full set of consolidated financial statements for 20X7. (If no entry is required for a transaction/event, select "No journal entry required" In the first account field.) view transaction list Consolidation Worksheet Entries B C D E Record the basic consolidation entry. Note: Enter debits before credits. Event Accounts Debit Credit Record entry Clear entry view consolidation entries c. Prepare a three-part consolidation worksheet as of December 31, 20X7 (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 deblt 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.) PRINCE CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X7 Consolidation Entries Prince Corp S word Co DR CR Consolidated Income Statement Sales Less: COGS Less: Depreciation expense Less: Other expenses Income from Sword Co. Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Assets Cash Accounts receivable Inventory Land Buildings & equipment Less: Accumulated depreciation Investment in Sword Co. Goodwill Total Assets Liabilities & Equity Accounts payable Mortgages payable Common stock Retained earnings Total Liabilities & Equity companles on December 31, 20X7, Included the following amounts: Sword Company Debit Credit $ 41,600 60, cee 119,000 36, eee 15e,eee Item Cash Accounts Receivable Inventory Land Buildings and Equipment Investment in Sword Company Cost of Goods Sold Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Common Stock Retained Earnings Sales Income from Sword Company Prince Corporation Debit Credit 84,000 55,00 178,000 82,00 497, eee 240,00 497, eee 22,00 68,000 62,00 $ 143,000 61, eee 189,000 285,000 346, eee 696,eee 65,000 $1,785,eee $1,785,eee 255,000 12,eee 68,000 25,eee $ 60,000 27,000 134, eee 48,00 94,000 403,00 $766, $ 766, Additional Information 1. On January 1, 20X7, Sword reported net assets with a book value of $142,000. A total of $25,000 of the acquisition price is applied to goodwill, which was not Impalred In 20X7. 2. Sword's depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment. 3. Prince used the equity-method in accounting for its Investment In Sword. 4. Detailed analysis of recevables and payables showed that Sword owed Prince $22,000 on December 31, 20x7. Required: a. Prepare all journal entries recorded by Prince with regard to its Investment In Sword during 20X7. (If no entry is required for a transaction/event, select "No journal entry required" In the first account field.) View transaction list Journal entry worksheet Record the initial investment in Sword Co. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal b. Prepare all consolidating entries needed to prepare a full set of consolidated financial statements for 20X7. (If no entry is required for a transaction/event, select "No journal entry required" In the first account field.) view transaction list Consolidation Worksheet Entries B C D E Record the basic consolidation entry. Note: Enter debits before credits. Event Accounts Debit Credit Record entry Clear entry view consolidation entries c. Prepare a three-part consolidation worksheet as of December 31, 20X7 (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 deblt 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.) PRINCE CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X7 Consolidation Entries Prince Corp S word Co DR CR Consolidated Income Statement Sales Less: COGS Less: Depreciation expense Less: Other expenses Income from Sword Co. Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Assets Cash Accounts receivable Inventory Land Buildings & equipment Less: Accumulated depreciation Investment in Sword Co. Goodwill Total Assets Liabilities & Equity Accounts payable Mortgages payable Common stock Retained earnings Total Liabilities & Equity
