Question

1 Approved Answer

Posted on Aug 17, 2024

Question 2 (Textbook Problem 4-12) On January 1, 2010, Parker Company purchased 90% of utstanding common stock of Sid Company for $180,000. At the time,

Question 2 (Textbook Problem 4-12) On January 1, 2010, Parker Company purchased 90% of utstanding common stock of Sid Company for $180,000. At the time, Sid stockholders' equity consisted of common stock, $120,000; APIC, S20,000; and retained carnings, $25,000. Assume that any difference between book value of equity and the value implied by the purchase price is attributable to land. The two companies' trial balances on December 31, 2010 and December 31, 2011 were as follows: 2010 - 2011 Parker Sid Parker Sid Cash $ 65,000 $ 35,000 S 70,000 $20,000 Accounts receivable 40.000 30,000 60,000 35.000 Inventory 25,000 15,000 40,000 30,000 Equity investment 184,500 193,500 0 Plant and equipment 110,000 85,000 125,000 90,000 Land 48,500 45.000 48.500 45,000 Dividends declared 20,000 15,000 20,000 15,000 Cost of goods sold 150.000 60.000 160,000 65.000 Operating expenses 35.000 15.000 35,000 20.000 Total debits $678.000 $300.000 $752.000 $320,000 Accounts payable $ 20,000 $15,000 $16,500 $16,000 Other liabilities 15,000 25,000 15.000 24.000 Common stock, S10 par value 200,000 120.000 200.000 120,000 APIC 70.000 20.000 70,000 20,000 Retained earnings, 1/1 55,000 25.000 168.000 30,000 Sales 300,000 95.000 260,000 110.000 Equity income 18.000 22.500 Total credits S678.000 $300,000 $752.000 $320,000 Required: Prepare a consolidated statements worksheet on December 31, 2011. Calculation for Changes during the year Calculation for beginning of 2011 Total Parent (90%) NCT Total Parent (906) BVE $170,000 $153,000 Land 35.000 31.500 Dividend $184.500 NCH (104) $17.000 AAP 3.500 Consolidation statements worksheet Parker Co and Subsidiary For the year ended December 31, 2011 Consolidated Eliminations Debit Credit Parent Subsidiary $110.000 65.000 45,000 Income statement: Sales Cost of goods sold Gross profit Equity income Operating expenses Net income Consolidated net income NCI - Income Consolidated NI - Controlling interests S260,000 160,000 100,000 22.500 35,000 $87.500 20.000 $25,000 $168,000 87,500 20,000 $235.500 $30,000 25.000 15,000 $40,000 Statement of RE: Retained earnings, 1/1 Net income Dividends Retained earnings, 12/31 Balance sheet: Cash Accounts receivable Inventory Equity investment $70,000 60,000 40,000 193,500 $20,000 35.000 30,000 S90.000 95.000 70,000 Land Plant and equipment 48.500 125.000 S537,000 $16,500 15.000 200.000 70,000 235,500 Accounts payable Long-term liabilities Common stock APIC Retained earnings NCI 128,500 215.000 $598,500 S32,500 39.000 200,000 70,000 45,000 90.000 $220,000 $16,000 24.000 120,000 20.000 40,000 S537,000 $220.000 $598,500 Total liabilities and stockholders' equity Consolidation statements worksheet Parker Co, and Subsidiary For the year ended December 31, 2011 Consolidated Eliminations Debit Credit Parent Subsidiary Income statement: Sales Cost of goods sold Gross profit Equity income Operating expenses Consolidated net income (net income) NCI - Income Consolidated NI - Controlling interests Statement of RE: Retained earnings, 1/1 Net income Dividends Retained earnings, 12/31 Balance sheet: Cash Accounts receivable Inventory Equity investment Land Plant and equipment Accounts payable Long-term liabilities Common stock APIC Retained comings NCI Total liabilities and stockholders' equity Question 2 (Textbook Problem 4-12) On January 1, 2010, Parker Company purchased 90% of utstanding common stock of Sid Company for $180,000. At the time, Sid stockholders' equity consisted of common stock, $120,000; APIC, S20,000; and retained carnings, $25,000. Assume that any difference between book value of equity and the value implied by the purchase price is attributable to land. The two companies' trial balances on December 31, 2010 and December 31, 2011 were as follows: 2010 - 2011 Parker Sid Parker Sid Cash $ 65,000 $ 35,000 S 70,000 $20,000 Accounts receivable 40.000 30,000 60,000 35.000 Inventory 25,000 15,000 40,000 30,000 Equity investment 184,500 193,500 0 Plant and equipment 110,000 85,000 125,000 90,000 Land 48,500 45.000 48.500 45,000 Dividends declared 20,000 15,000 20,000 15,000 Cost of goods sold 150.000 60.000 160,000 65.000 Operating expenses 35.000 15.000 35,000 20.000 Total debits $678.000 $300.000 $752.000 $320,000 Accounts payable $ 20,000 $15,000 $16,500 $16,000 Other liabilities 15,000 25,000 15.000 24.000 Common stock, S10 par value 200,000 120.000 200.000 120,000 APIC 70.000 20.000 70,000 20,000 Retained earnings, 1/1 55,000 25.000 168.000 30,000 Sales 300,000 95.000 260,000 110.000 Equity income 18.000 22.500 Total credits S678.000 $300,000 $752.000 $320,000 Required: Prepare a consolidated statements worksheet on December 31, 2011. Calculation for Changes during the year Calculation for beginning of 2011 Total Parent (90%) NCT Total Parent (906) BVE $170,000 $153,000 Land 35.000 31.500 Dividend $184.500 NCH (104) $17.000 AAP 3.500 Consolidation statements worksheet Parker Co and Subsidiary For the year ended December 31, 2011 Consolidated Eliminations Debit Credit Parent Subsidiary $110.000 65.000 45,000 Income statement: Sales Cost of goods sold Gross profit Equity income Operating expenses Net income Consolidated net income NCI - Income Consolidated NI - Controlling interests S260,000 160,000 100,000 22.500 35,000 $87.500 20.000 $25,000 $168,000 87,500 20,000 $235.500 $30,000 25.000 15,000 $40,000 Statement of RE: Retained earnings, 1/1 Net income Dividends Retained earnings, 12/31 Balance sheet: Cash Accounts receivable Inventory Equity investment $70,000 60,000 40,000 193,500 $20,000 35.000 30,000 S90.000 95.000 70,000 Land Plant and equipment 48.500 125.000 S537,000 $16,500 15.000 200.000 70,000 235,500 Accounts payable Long-term liabilities Common stock APIC Retained earnings NCI 128,500 215.000 $598,500 S32,500 39.000 200,000 70,000 45,000 90.000 $220,000 $16,000 24.000 120,000 20.000 40,000 S537,000 $220.000 $598,500 Total liabilities and stockholders' equity Consolidation statements worksheet Parker Co, and Subsidiary For the year ended December 31, 2011 Consolidated Eliminations Debit Credit Parent Subsidiary Income statement: Sales Cost of goods sold Gross profit Equity income Operating expenses Consolidated net income (net income) NCI - Income Consolidated NI - Controlling interests Statement of RE: Retained earnings, 1/1 Net income Dividends Retained earnings, 12/31 Balance sheet: Cash Accounts receivable Inventory Equity investment Land Plant and equipment Accounts payable Long-term liabilities Common stock APIC Retained comings NCI Total liabilities and stockholders' equity