Q. On January 1, 2016, Pope Company acquired 75% of the common stock of Siegel Company for $300,000. On this date Siegel had total owners' equity of $250,000. Any excess of cost over book value is attributable to goodwill. Pope accounts for its investment in Siegel using the simple equity method.

On January 1, 2016, Siegel Company sold to outside investors $300,000 par value of 10-year, 10% bonds. The price received was equal to par. The bonds pay interest semi-annually on July 1 and January 1.

On January 1, 2019, Pope purchased Siegel's bonds, paying $349,000. Pope still holds the bonds on December 31, 2019 and has amortized the premium, using the straight-line method.

On January 1, 2019, Pope held merchandise acquired from Siegel for $40,000. During 2019, Siegel sold merchandise to Pope for $100,000, of which $20,000 is held by Pope on December 31, 2019. Seaman's gross profit on all sales is 20%.

On December 31, 2019, Pope still owes Seaman $20,000 for merchandise acquired in December.

Required:

Complete the worksheet for consolidated financial statements for the year ended December 31, 2019. Round all computations to the nearest dollar.

Worksheet

Trial Balance Eliminations and

Pope Siegel Adjustments

Account Titles Company Company Debit Credit

Interest Receivable 15,000

Other Current Assets 157,212 371,000

Investment in Sub. Company 427,500

Investment in Sub. Bonds ???

Land 50,000 90,000

Buildings and Equipment 350,000 380,000

Goodwill

Interest Payable

(15,000)

Other Current Liabilities (120,000) (56,000)

Bonds Payable, 10%

(300,000)

Other Long-Term Liabilities (300,000) (50,000)

Common Stock - P Co. (200,000)

Other Paid-in Capital - P Co. (100,000)

Retained Earnings - P Co. (488,712)

Common Stock - S Co.

(50,000)

Other Paid-in Capital - S Co.

(70,000)

Retained Earnings - S Co.

(240,000)

Net Sales (500,000) (400,000)

Cost of Goods Sold 300,000 240,000

Operating Expenses 100,000 50,000

Interest Expense

???

Interest Income (?)

Subsidiary Income (?)

Dividends Declared - P Co. 50,000

Dividends Declared - S Co.

20,000

Gain or Loss on Retirement of Bonds

Consolidated Net Income

To NCI

To Controlling Interest

Total NCI

Ret. Earn. Contr. Int. 12-31

0 0

Consol.

Control. Consol.

Income

Retained Balance

Account Titles Statement NCI Earnings Sheet

Interest Receivable

Other Current Assets

Investment in Sub. Company

Investment in Sub. Bonds

Land

Buildings and Equipment

Rent Receivable

Goodwill

Interest Payable

Other Current Liabilities

Bonds Payable, 10%

Other Long-Term Liabilities

Common Stock - P Co.

Other Paid-in Capital - P Co.

Retained Earnings - P Co.

Common Stock - S Co.

Other Paid-in Capital - S Co.

Retained Earnings - S Co.

Net Sales

Cost of Goods Sold

Operating Expenses

Interest Expense

Interest Income

Subsidiary Income

Dividends Declared - P Co.

Dividends Declared - S Co.

Loss on Retirement of Bonds

Consolidated Net Income

To NCI

To Controlling Interest

Total NCI

Ret. Earn. Contr. Int. 12-31