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 Prince Corporation Item Debit Credit Debit Credit Accounts Receivable 6e.000 55,00e Inventory 119,eee 178,eee Land 36,000 82,00e Buildings and Equipment 497,00e 150,eee Company Cost of soods Sold 255,e0e Depreciation Expense 22,eee 12,00e other Expenses 68,eee 68,e0e Dividends Declared 62.000 25,0ee 143,08 66 ACCumulated Depreciation Mortgages Payable Common Stock 189,eee 134,00e 285,00e 48,000 Retained Earnings 346,eee 94,0ee Sales 696,eee 403,00e Income from Sword Company $1,785,0e0 $766,eee $766,e00 $1,785,eee Addltional 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 to goodwil, which was not Impalred In 20X7 2 Sword's depreclable assets had an estimated economic life of 11 years on the date of combinatlon. The difference between falr value and book value of tanglble assets is related entirely to buildings and equipment. 3. Prince used the equity-method in accounting for Its investment in Sword. 4. Detalled analysls of recelvables and payables showed that Sword owed Prince $22,000 on December 31, 20X7 applled Requlred a. Prepare all journal entries recorded by Prince with regard to Its investment in Sword during 20X7. (If no entry is required for a transactlon/event, select "No journal entry required" In the first account field.) View transaction list Journal entry worksheet A Record the initial investment in Sword Co. Note: Enter debits before credits General Journal Event Debit Credit 1 Clear entry Record entry View general journal b. Prepare all consolidating entries needed to prepare a full set of consolidated financlal statements for 20X7 (If no entry Is required for a transaction/event, select "No journal entry requiredi" in the first account field.) view transaction list Consolidation Worksheet Entries > A D E Record the basic consolidation entry Note: Enter debits before credits. Event Accounts Debit Credit 1 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 "subsidlary" 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.) PRINCE CORPORATION AND SUB SIDIARY Consolidated Financial Statements Works heet December 31, 20X7 Consolidation Entries Prince Corp Sword 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 Prince Corporation Item Debit Credit Debit Credit Accounts Receivable 6e.000 55,00e Inventory 119,eee 178,eee Land 36,000 82,00e Buildings and Equipment 497,00e 150,eee Company Cost of soods Sold 255,e0e Depreciation Expense 22,eee 12,00e other Expenses 68,eee 68,e0e Dividends Declared 62.000 25,0ee 143,08 66 ACCumulated Depreciation Mortgages Payable Common Stock 189,eee 134,00e 285,00e 48,000 Retained Earnings 346,eee 94,0ee Sales 696,eee 403,00e Income from Sword Company $1,785,0e0 $766,eee $766,e00 $1,785,eee Addltional 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 to goodwil, which was not Impalred In 20X7 2 Sword's depreclable assets had an estimated economic life of 11 years on the date of combinatlon. The difference between falr value and book value of tanglble assets is related entirely to buildings and equipment. 3. Prince used the equity-method in accounting for Its investment in Sword. 4. Detalled analysls of recelvables and payables showed that Sword owed Prince $22,000 on December 31, 20X7 applled Requlred a. Prepare all journal entries recorded by Prince with regard to Its investment in Sword during 20X7. (If no entry is required for a transactlon/event, select "No journal entry required" In the first account field.) View transaction list Journal entry worksheet A Record the initial investment in Sword Co. Note: Enter debits before credits General Journal Event Debit Credit 1 Clear entry Record entry View general journal b. Prepare all consolidating entries needed to prepare a full set of consolidated financlal statements for 20X7 (If no entry Is required for a transaction/event, select "No journal entry requiredi" in the first account field.) view transaction list Consolidation Worksheet Entries > A D E Record the basic consolidation entry Note: Enter debits before credits. Event Accounts Debit Credit 1 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 "subsidlary" 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.) PRINCE CORPORATION AND SUB SIDIARY Consolidated Financial Statements Works heet December 31, 20X7 Consolidation Entries Prince Corp Sword 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
