Q2 Will rate. Solve 2016 Consolidated Retained Earnings
On May 1, 2015, Peters Company purchased 80% of the common stock of Smith Company for $46,100. Additional data concerning these two companies for the years 2015 and 2016 are:
| | | 2015 | | 2016 |
| | | Peters | | Smith | | Peters | | Smith | |
| Common stock | | $94,300 | | $22,700 | | $94,300 | | $22,700 | |
| Other contributed capital | | 36,800 | | 9,800 | | 36,800 | | 9,800 | |
| Retained earnings, 1/1 | | 86,500 | | 10,400 | | 135,900 | | 49,900 | |
| Net income (loss) | | 64,200 | | 41,700 | | 39,200 | | (5,200 | ) |
| Cash dividends (11/30) | | 14,800 | | 2,200 | | 4,500 | | 0 | |
Any difference between book value and the value implied by the purchase price relates to Smith Companys land. Peters Company uses the cost method to record its investment.
On May 1, 2015, Peters Company purchased 80% of the common stock of Smith Company for $46,100. Additional data concerning these two companies for the years 2015 and 2016 are: Common stock Other contributed capital Retained earnings, 1/1 Net income (loss) Cash dividends (11/30) 2015 Peters Smith $94,300 $22,700 36,800 9,800 86,500 10,400 64,200 41,700 14,800 2,200 2016 Peters Smith $94,300 $22,700 36,800 9,800 135,900 49,900 39,200 (5,200) 4,500 -O- Any difference between book value and the value implied by the purchase price relates to Smith Company's land. Peters Company uses the cost method to record its investment. (a) Your answer is correct. Prepare the workpaper entries that would be made on a consolidated statements workpaper for the years ended December 31, 2015 and 2016 for Peters Company and its subsidiary, assuming that Smith Company's income is earned evenly throughout the year. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Debit Credit Date Account Titles and Explanation 2015 Dividend Income 1760 1760 Dividends Declared - Subsidiary Company (To record dividend income) Common Stock - Subsidiary Company 22,700 Other Contributed Capital - Subsidiary Company 9,800 Retained Earnings - Subsidiary Company 10,400 Difference between Implied and Book Value 825 Subsidiary Income Purchased 13900 Investment in Subsidiary 46,100 11525 Noncontrolling Interest (To eliminate investment in subsidiary and create noncontrolling interest) Land 825 825 Difference between Implied and Book Value (To eliminate excess of the book value of equity acquired.) 2016 Investment in Subsidiary 20480 20480 Retained Earnings - Parent Company (To establish reciprocity) Common Stock - Subsidiary Company 22,700 Other Contributed Capital - Subsidiary Company 9,800 Retained Earnings - Subsidiary Company 49,900 Land 825 Investment in Subsidiary 66580 16645 Noncontrolling Interest (To eliminate investment in subsidiary and create noncontrolling interest) eTextbook and Media List of Accounts (b) Your answer is partially correct. Calculate controlling interest in consolidated net income and consolidated retained earnings for 2015 and 2016. 2015 2016 Controlling interest in consolidated net income $ 8468 35040 $ $ $ $ Consolidated Retained Earnings 156380
