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The income statements for Paste Company and its subsidiaries, Waste Company and Baste Company, were prepared for the year ended December 3 1 , Year
The income statements for Paste Company and its subsidiaries, Waste Company and Baste Company, were prepared for the year ended December Year and are shown below:
Paste Waste Baste
Income
Sales $ $ $
Dividend
Rent
Interest
Total income
Expenses
Cost of sales
General and administrative
Interest
Income tax
Total expenses
Profit $ $ $
Additional Information
Paste purchased its interest in Waste on January Year On this date, Waste had a retained earnings balance of $ and the acquisition differential amounting to $ was allocated entirely to plant, with an estimated remaining life of eight years. The plant is used exclusively for manufacturing goods for resale.
Paste purchased its interest in Baste on December Year On this date, Baste had a retained earnings balance of $ The acquisition differential amounting to $ was allocated to goodwill; however, because Baste had failed to report adequate profits, the goodwill was entirely written off for consolidated purposes by the end of Year
Paste has established a policy that any intercompany sales will be made at a gross profit rate of
On January Year the inventory of Paste contained goods purchased from Waste for $
During Year the following intercompany sales took place:
Paste to Waste $
Waste to Baste
Baste to Paste
On December Year the inventories of each of the three companies contained items purchased on an intercompany basis in the following amounts:
Paste from Baste $
Waste from Paste
Baste from Waste
In addition to its merchandising activities, Waste is in the office equipment rental business. Both Paste and Baste rent office equipment from Waste. General and administrative expenses for Paste and Baste include rent expense of $ and $ respectively.
During Year Waste paid $ interest to Paste for intercompany advances.
All of Pastes dividend revenue pertains to its investments in Waste and Baste.
Retained earnings at December Year for Paste, Waste, and Baste were $ $ and $ respectively.
Paste Company uses the cost method to account for its investments, and uses tax allocation at a rate of when it prepares consolidated financial statements.
Required:
a Prepare a consolidated income statement for Year Leave no cells blank be certain to enter wherever required. Input all amounts as positive values. Omit $ sign in your response.
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