Question
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
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$694,500
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$708,000
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$714,750
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$721,500
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