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. Calculatetheunamortizeddifference/excess

  2. Calculate the goodwill or bargain purchase gain

  3. Calculate the unrealized profit for ending inventory for 2012 and 2013

  4. PreparethePurchasePriceAllocationandAmortizationSchedule

  5. Record all necessary elimination and adjusting journal entries

  6. Post the journal entries (as written in #5 above) to the Consolidation worksheet