Purple Manufacturing purchased $60$ percent of the ownership of Socks Corporation stock on January $1,20$X$1,$ at underlying book

value. At that date, the fair value of the noncontrolling interest was equal to $40$ percent of the book value of Socks Corporation. Purple

also purchased $$50,000$ of Socks bonds at par value on December $31,203.$ Socks sold the bonds on January $1,201,$ at $120$ ; they

have a stated interest rate of $12$ percent. Interest is paid semiannually on June $30$ and December $31.$ Assume Purple uses the fully

adjusted equity method.

On December $31,20$X$1,$ Socks sold a building with a remaining life of $15$ years to Purple for $$30,000.$ Socks had purchased the building

$10$ years earlier for $$40,000.$ It is being depreciated based on a $25-$year expected life.

Trial balances for the two companies on December $31203,$ are as follows:

Prepare a consolidated balance sheet for $203.$

Prepare a consolidated income statement for $203.$Purple Manufacturing purchased $60$ percent of the ownership of Socks Corporation stock on January $1,20$X$1,$ at underlying book value. At that date, the fair value of the noncontrolling interest was equal to $40$ percent of the book value of Socks Corporation. Purple also purchased $$50,000$ of Socks bonds at par value on December $31,20$X$3.$ Socks sold the bonds on January $1,20$X$1,$ at $120$; they have a stated interest rate of $12$ percent. Interest is paid semiannually on June $30$ and December $31.$ Assume Purple uses the fully adjusted equity method.

On December $31,20$X$1,$ Socks sold a building with a remaining life of $15$ years to Purple for $$30,000.$ Socks had purchased the building $10$ years earlier for $$40,000.$ It is being depreciated based on a $25-$year expected life.

Trial balances for the two companies on December $3120$X$3,$ are as follows:

Item Purple Manufacturing Socks Corporation

Debit Credit Debit Credit

Cash $ $68,000$ $ $55,000$

Accounts Receivable $100,00075,000$

Inventory $120,000110,000$

Investment in Socks Corporation Bonds $50,000$

Investment in Socks Corporation Stock $103,080$

Depreciable Assets $($net$)360,000210,000$

Interest Expense $20,00020,000$

Operating Expenses $302,200150,000$

Dividends Declared $40,00010,000$

Accounts Payable $ $94,200$ $ $52,000$

Bonds Payable $200,000200,000$

Bond Premium $28,000$

Common Stock $300,000100,000$

Retained Earnings $146,64050,000$

Sales $400,000200,000$

Income from Socks Corporation $22,440$

Total $ $1,163,280$ $ $1,163,280$ $ $630,000$ $ $630,000$

Required:

Prepare a consolidation worksheet for $20$X$3$ in good form.

Prepare a consolidated balance sheet, income statement, and statement of changes in retained earnings for $20$X$3.$