Refer to the preceding facts for Postmans acquisition of 80% of Spartans common stock and the bond

Refer to the preceding facts for Postman’s acquisition of 80% of Spartan’s common stock and the bond transactions. Postman uses the simple equity method to account for its investment in Spartan. On January 1, 2015, Postman held merchandise acquired from Spartan for $9,000. During 2015, Spartan sold $20,000 worth of merchandise to Postman. Postman held $12,000 of this merchandise at December 31, 2015. Postman owed Spartan $7,000 on December 31 as a result of these intercompany sales. Spartan has a gross profit rate of 25%.

Postman and Spartan had the following trial balances on December 31, 2015:

Required
Prepare the worksheet necessary to produce the consolidated financial statements for Postman Company and its subsidiary Spartan Company for the year ended December 31, 2015. Include the determination and distribution of excess and income distribution schedules.
On January 1, 2014, Postman Company acquired Spartan Company. Postman paid $400,000 for 80% of Spartan’s common stock. On the date of acquisition, Spartan had the following balance sheet:

Buildings, which have a 20-year life, are undervalued by $130,000. Equipment, which has a 5-year life, is undervalued by $50,000. Any remaining excess is considered to be goodwill. Spartan issued $100,000 of 8%, 10-year bonds for $103,432 on January 1, 2011, when the market rate was 7.5%. Annual interest is paid on December 31. Postman purchased the bonds for $95,514 on January 1, 2015, when the market rate was 9%. Both companies use the effective interest method to amortize the premium/discount on the bonds. Postman and Spartan prepared the following bond amortization schedules:

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Posłman Cash Accounts Receivable Inventory . Land Investment in Spartan Investment in Spartan Bonds.. Buildings 144,486 90,000 120,000 200,000 429,859 96,110 600,000 (310,000) 150,000 (90,000) 99,347 60,000 55,000 60,000 100,000 40,000) 80,000 [50,000) (55,000 25,000) (100,000) [2,023) (100,000)(10,000) (800,000) (90,000) (300,000) 120,000) (850,000)(320,000) 200,000 5,000 10,000 70,000 Equipment.... Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Paid-In Capital in Excess of Par Retained Earnings January 1, 2015 Sales Cost of Goods Sold. Depreciation Expense-Buildings Depreciation Expense-Equipment. . . . 500,000 30,000 15,000 140,000 (8,596) 7,676 21,859) 20,000 Subsidiary Income.... s Declared . 10,000 Totals Spartan Company Balance Sheet January 1, 2014 Assets Liabilities and Equity 90,000 Accounts payable Accounts receivable Inventory and Buildings Accumulated depreciation Equipment 50,000 60,000 100,000 (30,000) 80,000 Bonds payable Premium on bonds payable Common stock ($1 par) Paid-in capital in excess of par Retained earnings $ 17,352 100,000 2,648 10,000 90,000 100,000 Total assets.. . $320,000 Total liabilities and equity. $320,000 Postman Periodh tt Bance Period 1/2011 1/2012 $8,000 7,757 03,189 1/2012 1/2013 8,00 7,739 02,9281/2013 1/2014 8,000 7,720 102,648 1/2014 1/2015 8,00 7,699 102,347 1/2015 1/2016 8,000 7,676 102,023 1/2016 $8,000 $8,596 96,110 1/2017 8,00 7,652 101,675 1/2017 8,000 8,650 96,760 1/2018 8,00 7,626 101,301 1/2018 8,000 8,708 97,468 1/2019 8,000 7,598 100,899 1/2019 8,000 8,772 98,240 1/2020 8,00 7,567 100,4661/2020 8,000 8,842 99,082 1/2021 8,00 7,534 100,000 1/202 8,000 8,918 100,000 Adjusted for rounding Cash Interest Balance 串103,432 l/2011 $95,514