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PROBLEM 8-6 Workpaper-Purchase and Sale of Shares, Equity Method LO 3 LO 4 (Note: This is the same problem as PROBLEM 8-4, but assuming use
PROBLEM 8-6 Workpaper-Purchase and Sale of Shares, Equity Method LO 3 LO 4 (Note: This is the same problem as PROBLEM 8-4, but assuming use of the complete or the partial equity method.) Trial balances for Porter Company and its subsidiary, Spitz Company, as of December 31, 2019, follow: Debits Porter Spitt Cash $90.000 $40,000 Accounts Receivable (net) 62,000 38.000 Inventory 106,000 64,000 Investment in Spitz Company 231,660 Plant Assets 320,000 149.000 Land 69,000 46,000 Dividends Declared, 10/1 50.000 30,000 Total $928.660 S367.000 Credits Liabilities $102,000 $ 61,000 Common Stock, $2 par value 250.000 100,000 Other Contributed Capital 161.160 20.000 1/1 Retained Earnings 301.900 126,000 Income Summary 113.600 60,000 Total $928.660 S367.000 Porter Company made the following open-market purchase and sale of Spitz Company common stock: January 1, 2015. purchased 45,000 shares for $135.000: May 1, 2019, sold 4,500 shares for $28,000. The book value of Spitz Company's net assets on January 1, 2015, was $140,000; the excess of cost over net assets acquired relates to land. Subsequent changes in the book value of Spitz Com- pany's net assets are entirely attributable to earnings retained in the business. Spitz Company earns its income evenly throughout the year. Required: Prepare a consolidated financial statements workpaper as of December 31, 2019. Begin the income statement section of the workpaper with Net Income before Equity in Subsidiary Income and Gain on Sale of Investment," which is $63,200 for Porter Company and S60,000 for Spitz Company. PROBLEM 8-6 Workpaper-Purchase and Sale of Shares, Equity Method LO 3 LO 4 (Note: This is the same problem as PROBLEM 8-4, but assuming use of the complete or the partial equity method.) Trial balances for Porter Company and its subsidiary, Spitz Company, as of December 31, 2019, follow: Debits Porter Spitt Cash $90.000 $40,000 Accounts Receivable (net) 62,000 38.000 Inventory 106,000 64,000 Investment in Spitz Company 231,660 Plant Assets 320,000 149.000 Land 69,000 46,000 Dividends Declared, 10/1 50.000 30,000 Total $928.660 S367.000 Credits Liabilities $102,000 $ 61,000 Common Stock, $2 par value 250.000 100,000 Other Contributed Capital 161.160 20.000 1/1 Retained Earnings 301.900 126,000 Income Summary 113.600 60,000 Total $928.660 S367.000 Porter Company made the following open-market purchase and sale of Spitz Company common stock: January 1, 2015. purchased 45,000 shares for $135.000: May 1, 2019, sold 4,500 shares for $28,000. The book value of Spitz Company's net assets on January 1, 2015, was $140,000; the excess of cost over net assets acquired relates to land. Subsequent changes in the book value of Spitz Com- pany's net assets are entirely attributable to earnings retained in the business. Spitz Company earns its income evenly throughout the year. Required: Prepare a consolidated financial statements workpaper as of December 31, 2019. Begin the income statement section of the workpaper with Net Income before Equity in Subsidiary Income and Gain on Sale of Investment," which is $63,200 for Porter Company and S60,000 for Spitz Company
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