Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PROBLEM 3-3 Intercompany Bond Holdings at Par, 90% Owned Subsidiary LO 8 LO9 Balance sheets for P Company and S Company on August 1, 2019,

image text in transcribed
PROBLEM 3-3 Intercompany Bond Holdings at Par, 90% Owned Subsidiary LO 8 LO9 Balance sheets for P Company and S Company on August 1, 2019, are as follows: P Company S Company Cash $ 165,500 $106,000 Receivables 366,000 126,000 Inventory 261,000 108,000 Investment in bonds 306,000 Investment in S Company stock 586,500 Plant and equipment (net) 573,000 320,000 Land 200.000 300.000 Total $2,458,000 $960,000 Accounts payable $ 174,000 $ 58,000 Accrued expenses 32,400 26,000 Bonds payable, 8% -0 200,000 Common stock 1,500,000 460,000 Other contributed capital 260,000 60,000 Retained earnings 491,600 156.000 Total $2,458,000 $960,000 Required: Prepare a workpaper for a consolidated balance sheet for P Company and its subsidiary on August 1, 2019, taking into consideration the following: 1. P Company acquired 90% of the outstanding common stock of S Company on August 1, 2019, for a cash payment of $586,500. 2. Included in the Investment in Bonds account are $40,000 par value of S Company bonds payable that were purchased at par by P Company in 2002. The bonds pay interest on April 30 and October 31. S'Company has appropriately accrued interest expense on August 1, 2019;P Company, however, inadvertently failed to accrue interest income on the Company bonds. 3. Included in P Company receivables is a $35,000 cash advance to s Company that was mailed on August 1, 2019. S Company had not yet received the advance at the time of the preparation of its August 1, 2019 accounts. 4. Assume that any excess of book value over the value implied by purchase price is due to overvalued plant and equipment

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Accounting

Authors: Debra C. Jeter, Paul Chaney

2nd Edition

0471218529, 978-0471218524

More Books

Students also viewed these Accounting questions