zoahdormei.nuah posted a question May 10, 2014 at 5:59pm On January 1, 20X4, Packard Company acquired an 80% interest in the common stock of Stackner Company for $350,000. Stackner had the following balance sheet on the date of acquisition: StacknerCompany Balance Sheet January1, 20X4 Assets Liabilitiesand Equity Accountsreceivable .. ... ... $ 40,000 Accounts payable .. .... .. .. . . . $ 42,297 Inventory . .. .. ...... ... ... 20,000 Bonds payable . . .. .... .. .. . . . 100,000 Land.. .. . .. .. ...... ... ... 35,000 Discount on bondspayable. .. . . . (2,297) Buildings . .. .. ...... ... ... 250,000 Common stock,$10 par . .. .. . . . 10,000 Accumulated depreciation ... (50,000) Paid-in capital in excess of par . . . 90,000 Equipment .. .. ...... ... ... 120,000 Accumulated depreciation ... (60,000) Retained earnings .. .... .. .. . . . 115,000 Total assets.. ...... ... ... $355,000 Total liabilities and equity .. . . . $355,000 Buildings (20-year life) are undervalued by $75,000. Equipment (ve-year life) is undervalued by $60,000. Any remaining excess is considered to be goodwill. Refer to the preceding facts for Packards acquisition of 80% of Stackners com- mon stock. Packard uses the simple equity method to account for its investment in Stackner. On January 1, 20X5, Stackner held merchandise acquired from Packard for $15,000. During 20X5, Packard sold $50,000 worth of merchandise to Stackner. Stackner held $20,000 of this merchandise at December 31, 20X5. Stackner owed Packard $10,000 on December 31 as a result of these intercompany sales. Packard has a gross prot rate of 30%. Stackner issued $100,000 of 8%, 10-year bonds for $96,719 on January 1, 20X1. Annual interest is paid on December 31. Packard purchased the bonds on January 1, 20X5 for $100,930. Both companies use the straight-line method to amortize the premium/discount on the bonds. Packard and Stackner used the following bond amortization schedules: Stackner Packard Period Cash Interest Balance Period Cash Interest Balance Jan.X1 $ 96,719 Jan.X1 Jan.X2 $8,000 $8,328 97,047 Jan.X2 Jan.X3 8,000 8,328 97,375 Jan.X3 Jan.X4 8,000 8,328 97,703 Jan.X4 Jan.X5 8,000 8,328 98,031 Jan.X5 $100,930 Jan.X6 8,000 8,328 98,360 Jan.X6 $8,000 $7,845 100,775 Jan.X7 8,000 8,328 98,688 Jan.X7 8,000 7,845 100,620 Jan.X8 8,000 8,328 99,016 Jan.X8 8,000 7,845 100,465 Jan.X9 8,000 8,328 99,344 Jan.X9 8,000 7,845 100,310 Jan.Y0 8,000 8,328 99,672 Jan.Y0 8,000 7,845 100,155 Jan.Y1 8,000 8,328 100,000 Jan.Y1 8,000 7,845 100,000 Packard and Stackner had the following trial balances on December 31, 20X5: Packard Company Stackner Company Cash .. .... .. . . .. . .. .... .. .. .. . .. . . . . .. . . ... .. .... .. . . . . . .. . 71,070 32,032 Accounts Receivable . .. .. .... .. ... . . .. . . . . .. . .. .. .. .... .. . .. . . . 90,000 60,000 Inventory ... .. . . .. . .. .... .. .. .. . .. . . . . .. . . ... .. .... .. . . . . . .. . 100,000 30,000 Land. .. .. .. . . . . .. . .. .. .. .... .. . .. . . .. . . . . . .. .... .. . . . . . .. . . . 150,000 45,000 Investment inStackner.. .. .... .. ... . . .. . . . . .. . .. .. .. .... .. . .. . . . 385,738 Investment inStackner Bonds. .... .. . .. . . .. . . . . . .. .. .. .. .... . .. . . . 100,775 Buildings ... .. . . .. . .. .... .. .. .. . .. . . . . .. . . ... .. .... .. . . . . . .. . 500,000 250,000 Accumulated Depreciation .. .... .. . .. . . .. . . . . . .. .. .. .. .... . .. . . . (300,000) (70,000) Equipment .. .. . . . . . .. .... .. .... . .. . . . . .. . . . .. .. .... .. . . . . . .. . 200,000 120,000 Accumulated Depreciation .. .... .. . .. . . .. . . . . . .. .. .. .. .... . .. . . . (100,000) (84,000) Accounts Payable . . ... .. .. .. .. .. . . . .. . . .. .. . .... .. .. .. .. . . . . . . (55,000) (25,000) Bonds Payable. . . . . . .. .... .. .... . .. . . . . .. . . . .. .. .... .. . . . . . .. . (100,000) Discount onBonds Payable.. .. .. ... . . . . .. . . .. . .. .... .. .. .. . .. . . . 1,640 Common Stock .. . . ... .. .. .. .. .. . . . .. . . .. .. . .... .. .. .. .. . . . . . . (100,000) (10,000) Paid-In Capital in Excessof Par ... .. . .. . . .. . . . . . .. .. .. .. .... . .. . . . (600,000) (90,000) RetainedEarnings, Jan. 1,20X5.. .. . .. . . .. . . . . . .. .. .. .. .... . .. . . . (400,000) (145,000) Sales .. .... .. . . .. . .. .... .. .. .. . .. . . . . .. . . ... .. .... .. . . . . . .. . (600,000) (220,000) Cost ofGoods Sold . ... .. .. .. .. .. . . . .. . . .. .. . .... .. .. .. .. . . . . . . 410,000 120,000 Depreciation ExpenseBuildings. .. . .. . . . . .. . . . . . .. .... .. .. . . . .. . 30,000 10,000 Depreciation ExpenseEquipment.. . .. . . . . .. . . . . . .. .... .. .. . . . .. . 15,000 12,000 Other Expenses . .. .. ... .. .. .. . . .. . .. .. .. .. .. .. . .. . . .. . . . . .. . .. 110,000 45,000 Interest Revenue. .. .. ... .. .. .. . . .. . .. .. .. .. .. .. . .. . . .. . . . . .. . .. (7,845) Interest Expense. .. .. ... .. .. .. . . .. . .. .. .. .. .. .. . .. . . .. . . . . .. . .. 8,328 Subsidiary Income. .. ... .. .. .. . . .. . .. .. .. .. .. .. . .. . . .. . . . . .. . .. (19,738) Dividends Declared.. .. . .... .. . . . . . .. .... .. .... . .. . . . . .. . . . . . .. 20,000 10,000 Total. ... .. . . .. .... ... .. . . .. ... .... .. .. .. . . . . . .. .. . . .. ... .. 0 0 Prepare the worksheet necessary to produce the consolidated nancial statements for Pack- ard Company and its subsidiary Stackner Company for the year ended December 31, 20X5. Include the determination and distribution of excess and income distribution schedules