Question

Paque Corporation owns 90% of the common stock of Segal Company. The stock was purchased for $810,000 on January 1, 2009, when Segal Company’s retained earnings were $150,000. Financial data for 2013 are presented here:


The January 1, 2013, inventory of Paque Corporation includes $45,000 of profit recorded by Segal Company on 2012 sales. During 2013, Segal Company made intercompany sales of $300,000 with a markup of 20% of selling price. The ending inventory of Paque Corporation includes goods purchased in 2013 from Segal Company for $75,000. Paque Corporation uses the complete equity method to record its investment in Segal Company.

Required:
A. Prepare the consolidated statements workpaper for the year ended December 31, 2013.
B. Calculate consolidated retained earnings on December 31, 2013, using the analytical or t-accountapproach.


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  • CreatedMarch 13, 2015
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