Question : 85. The adjusted, preclosing trial balances of Pie Company and Soup : 1245743

 

85. The adjusted, preclosing trial balances of Pie Company and Soup Company on December 31, Year 2, appear below. 

 

 

 

 

$  4,000

 

$  1,000

 

Accounts Receivable

 

 

 

 

Merchandise Inventory

10,000

 

10,000

 

Investment in Soup Company

9,000

 

 

Land

l,000

 

2,000

 

Buildings and Equipment, net

 

 

5,000

 

Accounts Payable

 

$17,500

 

$12,500

Bonds Payable

 

5,000

 

4,000

Common Stock

 

2,500

 

1,000

Additional Paid-in Capital

 

1,000

 

2,500

Retained Earnings, January 1

 

10,500

 

2,000

Sales

 

35,000

 

25,000

Equity in Earnings of Soup Company

 

5,000

 

Cost of Goods Sold

25,000

 

17,500

 

Selling and Administrative Expenses

5,000

 

2,500

 

Dividends Declared

 

_______

 

 

Totals

$76,500

$76,500

$47,000

$47,000

 

 

 

 

 

Parent Company owns 100 percent of the common stock of Soup Company. It acquired the shares on January 2, Year 1, for an amount equal to the book value of Soup Company’s underlying net assets. On December 31, Year 2, Soup Company owes Pie Company $1,100 arising from short-term working capital loans.Required:Prepare in journal entry form the elimination entries required on December 31, Year 2, to prepare a consolidated financial statement for Pie Company and Soup Company. Note that neither a formal work sheet nor formal financial statements are required. 

 

 

86. Piu Co. owns 100% of Xu Co. Piu has owned Xu since Xu was incorporated. At December 31, $15,000 of Xu’s accounts receivable represent amounts payable by Piu. $10,000 of Piu’s accounts receivable represent amounts payable by Xu. During the current year, Xu sold $10,000 in merchandise to Piu (at cost its cost of $10,000). Piu has sold all the merchandise purchased from Xu. 

CONDENSED BALANCE SHEETSAs of December 31

 

 

 

Accounts receivable

$     60,000

$  40,000

Investment in Xu (equity)

130,000

Other assets

 

 

Total assets

 

 

 

 

 

 

 

 

Accounts payable

$     50,000

$  20,000 

Other liabilities

640,000

90,000 

Common stock

100,000

150,000 

Retained earnings

 

 

Total liabilities and equity

 

 

 

 

 

CONDENSED INCOME STATEMENTfor Current Year

 

 

 

Sales

$300,000 

$  90,000 

Equity in earnings of Xu

 

 

Total revenues

 

 

Cost of goods sold

$160,000 

60,000 

Depreciation

50,000 

20,000 

Other expenses

20,000 

20,000 

Tax expense

 

 

Total expenses

 

 

Net income

 

 

 

 

 

Required:Prepare the appropriate elimination entries necessary to prepare a consolidated balance sheet and income statement. 

 

 

 

 

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