Pringle Corporation acquired an 80% interest in Chip Corporation for $300,000 on January 1, 2012 when Chip's stockholders' equity consisted of $200,000 capital stock and $25,000 retained earnings. The excess cost over book value acquired was allocated to equipment that was undervalued by $50,000, inventory that was overvalued by $25,000 and to goodwill. The inventory was sold in 2012 and the equipment had a 5-year remaining useful life.

• Chip regularly sells inventory to Pringle at 150% of cost. Intercompany sales were $120,000 in 2012 and $90,000 in 2013. Pringle's inventory included $30,000 of this merchandise at 12/31/12 and $45,000 of this merchandise at 12/31/13.

• Pringle has $10,000 in accounts payable due to Chip.

  Required:

  Prepare the consolidation workpapers for Pringle Corporation using the process reviewed in class:

  1. PreparethePurchasePriceAllocationandAmortizationSchedule

  2. Record all necessary elimination and adjusting journal entries

  3. Post the journal entries (as written in #2 above) to the Consolidation worksheet

2013 Statements	Pringle	Chip	Adjustments		Consolidated
			DR	CR
Sales	900,000	300,000
Cost of Goods Sold	(600,000)	(150,000)
Gross Profit	300,000	150,000
Income from Chip	36,000
Other Expenses	(250,000)	(90,000)
Total Consolidated Net Income	86,000	60,000
Constolling Interest Sahres of CNI
Retained Earnings - Pringle BOY	212,000
Retained Earnings - Chip BOY		50,000
Net Income	86,000	60,000
Dividends	(100,000)	(20,000)
Retained Earnings EOY	198,000	90,000
Cash	72,000	15,000
Accounts Receivable	26,000	20,000
Inventories	82,000	60,000
Dividend Receivable	8,000
Land	70,000	30,000
Building and Equipment	420,000	235,000
Investment in Chip	344,000
Total Assets	1,022,000	360,000
Accounts Payable	24,000	15,000
Dividends Payable		10,000
Other Liablilities	100,000	450,000
Captital Stock	700,000	200,000
Retained Earnings	198,000	90,000
Total Liabilities and Equities	1,022,000	360,000