Poe Corporation purchased a 90 percent interest in San Corporation on December 31, 2011, for $2,700,000 cash, when San had capital stock of $2,000,000 and retained earnings of $500,000. All San's assets and liabilities were recorded at fair values when Poe acquired its interest. The excess of fair value over book value is goodwill. The Poe???San affiliation is a vertically integrated merchandising operation, with San selling all of its output to Poe Corporation at 140 percent of its cost. Poe sells the merchandise acquired from San at 150 percent of its purchase price from San. All of Poe's December 31, 2013, and December 31, 2014, inventories of $280,000 and $420,000, respectively, were acquired from San. San's December 31, 2013, and December 31, 2014, inventories were $800,000 each. Poe's accounts payable at December 31, 2014, includes $100,000 owed to San from 2014 purchases. Comparative financial statements for Poe and San Corporations at and for the year ended December 31, 2014, are as follows:

REQUIRED: Prepare a consolidation workpaper for Poe Corporation and Subsidiary for the year ended December 31,2014.

Transcribed Image Text:

Poe San Balance Sheet at December 31, 2014 $ 758 $ 500 800 Cash Inventory Other current assets Plant assets-net 420 600 200 3,000 3,000 Investment in San Total assets 3,222 $8.000 $4,500 Current liabilities $1,700 4,000 $1,300 2,000 Capital stock Retained earnings Total equities 2.300 $8,000 1,200 $4,500