Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Workpapers (constructive retirement of bonds, intercompany sales) Son $1.000 (600) P7-6 Financial statements for Pop Corporation and its 75 percent-owned subsidiary, Son Corporation, form are

image text in transcribed
image text in transcribed
Workpapers (constructive retirement of bonds, intercompany sales) Son $1.000 (600) P7-6 Financial statements for Pop Corporation and its 75 percent-owned subsidiary, Son Corporation, form are summarized as follows (in thousands): Pop Combined Income and Retained Earnings Statement for the Year Ended December 31, 2017 $1,260 Sales 60 Gain on plant 104 Income from Son (700) Cost of goods sold (152) (80) Depreciation expense (40) Interest expense (92) (120) Other expenses 440 200 Net income 300 200 Add: Beginning retained earnings (320) (160) Deduct: Dividends 420 $ 240 Retained earnings December 31 Balance Sheet at December 31, 2017 Cash $ 54 $ 162 Bond interest receivable 10 Other receivables-net 80 60 Inventories 160 100 Land 180 140 Buildings-net 300 Equipment-net 280 180 Investment in Son 686 Investment in Pop bonds Total assets $1,740 $1,200 Accounts payable $ 100 $ 160 Bond interest payable 20 10% bonds payable 400 Common stock 800 800 Retained earnings 420 240 Total equities $1,740 $1,200 360 - 188 Pop Corporation acquired its interest in Son at book value during 2014, when the fair valued Son's assets and liabilities were equal to recorded book values. ADDITIONAL INFORMATION 1. Pop uses the equity method for its investment in Son. 2. Intercompany sales of merchandise between the two affiliates totalled $100,000 during 2017. All intercom- pany balances have been paid except for $20,000 in transit from Son to Pop at December 31, 2017. 3. Unrealized profits in Son's inventories of merchandise acquired from Pop were $24.000 at December 31, 2016, and $30,000 at December 31, 2017 4. Son sold equipment with a six-year remaining useful life to Pop on January 2, 2015, at a gain of $48,000. The equipment is still in use by Pop. 5. Pop sold a plant to Son on July 1, 2017. The land was sold at a gain of $20,000 and the building, which had a remaining useful life of 10 years, at a gain of $40,000. 6. Son purchased $200,000 par of Pop's 10 percent bonds in the open market for $188.000 plus $10,000 accrued interest on December 31, 2017. Interest is paid semiannually on January 1 and July 1, and the bonds mature on January 1, 2022. REQUIRED: Prepare a consolidation workpaper for Pop Corporation and Subsidiary for the year ended December 31, 2017

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Fundamentals For Health Care Management

Authors: Steven A. Finkler, David M. Ward, Thad Calabrese

3rd Edition

1284124932, 9781284124934

More Books

Students also viewed these Accounting questions

Question

Be able to differentiate between arbitration and mediation

Answered: 1 week ago

Question

Understand how arbitrators are credentialed and selected

Answered: 1 week ago

Question

Appreciate the advantages of arbitration

Answered: 1 week ago