The Pizza Company acquired 90% of the outstanding voting common stock of the Salsa Company on June 30, 2017. The Pizza Company had effective control over the Salsa Company, however, the Pizza Company uses the Cost Method to account for its Investment in the Salsa Company. The purchase price was $426,000 and on the acquisition date the Salsa Company had Capital Stock of $300,000, Additional Paid in Capital of $50,000 and Retained Earnings of $60,000. On the acquisition date, the fair value of Salsa Companys building was in excess of its cost value and therefore, the entire excess of implied cost over the fair value of the recorded net assets was attributed to the building. As of the acquisition date, the building had an estimated useful life of 5 years, and the straight-line method for depreciation is used. Between the date of acquisition, June 30, 2017 and December 31, 2019, the two companies had the following intercompany transactions: 1. On December 31, 2017, Pizza Company sold equipment (with an original cost of $100,000 and accumulated depreciation of $50,000) to Salsa Company for $97,500. This equipment has since been depreciated at an annual rate of 20% of the purchase price. . 2. During 2018, Salsa Company sold land to Pizza Company at a profit of $15,000. 3. During 2018, the Salsa Company sold $17,500 of inventory to the Pizza Company. As of December 31, 2018, the remaining inventory from this intercompany sale had a profit of $7,500. 4. During 2019, Salsa Company sold inventory to the Pizza Company for $375,000, of which $60,000 was unpaid on December 31, 2019. The December 31, 2019, inventory of Pizza Company included goods acquired from Salsa Company on which Salsa Company recognized a profit of $10,500. Required: 1. Using the Excel workpaper provided, complete a consolidated financial statements workpaper for the year ended December 31, 2019.

Pizza Company and Subsidiary Consolidated Statements Workpaper For the year ended December 31, 2019 Eliminations Debit Noncontrolling Interests Consolidating Balances Salsa Company 1,120.000 Credit Pizza Company 2,555,500 $ 54,000 2.609.500 1,730.000 1,120,000 690.500 Sales Dividend Income Total Revenue Cost of Goods Sold Expenses: Rent Expense Salary Expense Utilities Expense Professional Expenses Depreciation Exp. Telephone Expense Total Expenses Total Cost and Expense Net Income 145,000 320,000 34,600 69,000 112,500 12,600 65.255 27,050 60.000 29.850 251.000 29,645 654.500 2.384.500 225.000 $ 941,500 178,500 595,000 1/1 Retained Earnings Net Income Dividends Declared 12/31 Retained Earnings 225,000 (100,000) 139,500 178,500 (60,000) 720,000 $ 258,000 119.500 342.000 362,000 132.500 125.000 201,000 13,000 40.500 Cash Accounts Receivable Inventory Other Current Assets Land Investment in Shea Company Property and Equipment Accumulated Depreciation Total Assets 150,000 426,000 825.000 241,000 (207,000) 2,058,000 $ (53,500) 659,000 S 32,000 295,000 43.000 1,000,000 19,000 300,000 Accounts Payable Other Liabilities Capital Stock Additional Paid in Capital Retained Earnings 50,000 720.000 258.000 Total Liabilities and Equity $ 2,058,000 $ 659.000 Pizza Company and Subsidiary Consolidated Statements Workpaper For the year ended December 31, 2019 Eliminations Debit Noncontrolling Interests Consolidating Balances Salsa Company 1,120.000 Credit Pizza Company 2,555,500 $ 54,000 2.609.500 1,730.000 1,120,000 690.500 Sales Dividend Income Total Revenue Cost of Goods Sold Expenses: Rent Expense Salary Expense Utilities Expense Professional Expenses Depreciation Exp. Telephone Expense Total Expenses Total Cost and Expense Net Income 145,000 320,000 34,600 69,000 112,500 12,600 65.255 27,050 60.000 29.850 251.000 29,645 654.500 2.384.500 225.000 $ 941,500 178,500 595,000 1/1 Retained Earnings Net Income Dividends Declared 12/31 Retained Earnings 225,000 (100,000) 139,500 178,500 (60,000) 720,000 $ 258,000 119.500 342.000 362,000 132.500 125.000 201,000 13,000 40.500 Cash Accounts Receivable Inventory Other Current Assets Land Investment in Shea Company Property and Equipment Accumulated Depreciation Total Assets 150,000 426,000 825.000 241,000 (207,000) 2,058,000 $ (53,500) 659,000 S 32,000 295,000 43.000 1,000,000 19,000 300,000 Accounts Payable Other Liabilities Capital Stock Additional Paid in Capital Retained Earnings 50,000 720.000 258.000 Total Liabilities and Equity $ 2,058,000 $ 659.000