PROBLEM 4-4 Consolidated Workpaper, Partially Owned Subsidiary, Cost Method Place Company purchased 92% of the common stock of Shaw, Inc. on January 1, 2010, for $400,000. Trial balances at the end of 2010 for the companies were: Place Shaw Cash $ 80,350 $ 87,000 Accounts and Notes Receivable 200,000 210,000 Inventory, 1/1 70,000 50,000 Investment in Shaw, Inc. 400,000 0 Plant Assets 300,000 200,000 Dividends Declared 35,000 22,000 Purchases 240,000 150,000 Selling Expenses 28,000 20,000 Other Expenses 15,000 13,000 $1,368,350 $752,000 Accounts and Notes Payable $ 99,110 $ 38,000 Other Liabilities 45,000 15,000 Common Stock, $10 par 150,000 100,000 Other Contributed Captital 279,000 149,000 Retained Earnings, 1/1 225,000 170,000 Sales 550,000 280,000 Dividend Income 20,240 0 $1,368,350 $752,000 Inventory balances on December 31, 2010, were $25,000 for Place and $15,000 for Shaw, Inc. Shaws accounts and notes payable contain a $15,000 note payable to Place. Required: Prepare a workpaper for the preparation of consolidated financial statements on December 31, 2010. The difference between book value of equity acquired and the value implied by the purchase price relates to subsidiary land, which is included in plant assets.

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Problem 4-4	Place Company and Subsidiary
	Consolidated Statements Workpaper
	For the Year Ended December 31, 2010
	Place	Shaw		Eliminations			Noncontrolling	Consolidated
Income Statement	Company	Company		Debit		Credit	Interest	Balances
Sales	550,000	280,000
Dividend Income	20,240
Total Revenue	570,240	280,000
Cost of Goods Sold:
Inventory, 1/1	70,000	50,000
Purchases	240,000	150,000
Available for sale	310,000	200,000
Inventory, 12/31	25,000	15,000
Cost of Goods Sold	285,000	185,000
Selling Expense	28,000	20,000
Other Expense	15,000	13,000
Total Cost and Expense	328,000	218,000
Net/Consolidated Income	242,240	62,000
Noncontrolling Interest
In Consolidated Income
Net Income to Retained Earnings	242,240	62,000
Retained Earnings Statement
1/1 Retained Earnings:
Place Company	225,000
Shaw Company		170,000
Net Income from Above	242,240	62,000
Dividends Declared
Place Company	(35,000)
Shaw Company		(22,000)
12/31/ Retained Earnings
to Balance Sheet	432,240	210,000
	Place	Shaw		Eliminations			Noncontrolling	Consolidated
Balance Sheet	Company	Company		Debit		Credit	Interest	Balances
Cash	$ 80,350	$ 87,000
Accounts and Notes Receivable	200,000	210,000
Inventory	25,000	15,000
Investment in Shaw Comp.	400,000
Difference b/w Implied & Book Value
Plant Assets	300,000	200,000
Total	$ 1,005,350	$ 512,000
Accounts and Notes Payable	$ 99,110	$ 38,000
Other Liabilities	45,000	15,000
Common stock
Place Company	150,000
Shaw Company		100,000
Other contributed capital
Place Company	279,000
Shaw Company		149,000
Retained earnings from above	432,240	210,000
1/1 Noncontrolling Interest in net assets
12/31 Noncontrolling interest in net assets
Total	$ 1,005,350	$ 512,000