QUESTION 3.

Elltol Company Ingrad Company

Balance Sheet Balance Sheet

January 1, 2X13 January 1, 2X13

Cash $ 40 Cash $120

Net Fixed Assets 90 Net Fixed Assets 130

Total Assets $130 Total Assets $250

Accounts Payable $ 20 Accounts Payable $ 30

Long-term Bonds Payable 60 Long-term Bonds Payable 100

Stockholders' Equity 50 Stockholders' Equity 120

Total Liab. & Total Liab. &

Stockholders' Equity $130 Stockholders' Equity $250

On January 1, 2X13, Ingrad Company acquired 100% of the outstanding shares of Elltol Company for $50 in cash. During 2X13, Elltol Company had net income of $10, and Ingrad Company had net income of $25. All net income for both companies is in the form of additional cash.

Prepare the following:

a.The journal entry necessary for Ingrad Company on January 1, 2X13.

b.The journal entry necessary for Elltol Company on January 1, 2X13.

c.The consolidated balance sheet immediately after the acquisition.

d.The one elimination entry necessary on December 31, 2X13, assuming none of the income for either company resulted from intercompany sales.

e.The consolidated balance sheet at December 31, 2X13.