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The financial statements of Post Company and Stamp Company on December 31, Year 5, were as follows: BALANCE SHEETS Assets Post Stamp Cash $ 50,000

The financial statements of Post Company and Stamp Company on December 31, Year 5, were as follows:

BALANCE SHEETS
Assets Post Stamp
Cash $ 50,000 $ 10,000
Accounts receivable 250,000 100,000
Inventories 3,000,000 520,000
Equipment (net) 6,150,000 2,500,000
Buildings (net) 2,600,000 500,000
Investment in Stamp (at cost) 850,000
$ 12,900,000 $ 3,630,000
Liabilities and Shareholders Equity
Current liabilities $ 300,000 $ 170,000
Long-term liabilities 4,000,000 1,100,000
Common shares 3,000,000 500,000
Retained earnings 5,600,000 1,860,000
$ 12,900,000 $ 3,630,000

STATEMENTS OF INCOME AND RETAINED EARNINGS
Post Stamp
Sales revenue $ 3,500,000 $ 900,000
Other revenues 300,000 30,000
3,800,000 930,000
Cost of goods sold 1,700,000 330,000
Selling and administrative expenses 300,000 100,000
Other expenses 200,000 150,000
Income tax expense 300,000 70,000
$ 2,500,000 $ 650,000
Net income 1,300,000 280,000
Retained earnings, beginning balance $ 4,500,000 $ 1,600,000
5,800,000 18,800,000
Dividends declared 200,000 20,000
Retained earnings, ending balance $ 5,600,000 $ 1,860,000

Additional Information

Post owns 70 percent of Stamp and carries its investment in Stamp on its books by the cost method.

During Year 4, Post sold Stamp $100,000 worth of merchandise, of which $60,000 was resold by Stamp in the year. During Year 5, Post had sales of $200,000 to Stamp, of which 40 percent was resold by Stamp. Intercompany sales are priced to provide Post with a gross profit of 30 percent of the sales price.

On December 31, Year 4, Post had in its inventories $150,000 of merchandise purchased from Stamp during Year 4. On December 31, Year 5, Post had in its ending inventories $100,000 of merchandise that had resulted from purchases of $350,000 from Stamp during Year 5. Intercompany sales are priced to provide Stamp with a gross profit of 60 percent of the sale price.

Both companies are taxed at 25 percent.

Which of the following would appear on Posts consolidated balance sheet at December 31, Year 5, for non-controlling interest?

Multiple Choice

  • $694,500

  • $708,000

  • $714,750

  • $721,500

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