Penny Manufacturing Company acquired 75 percent of Saul Corporation stock at underlying book value. At the date of acquisition, the fair value of the noncontrolling interest was equal to 25 percent of Saul’s book value. The balance sheets of the two companies for January 1, 20X1, are as follows:

On January 2, 20X1, Penny purchased an additional 2,500 shares of common stock directly from Saul for $150,000.

Required

a. Prepare the consolidation entry needed to complete a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny.

b. Prepare a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny.

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Cash Accounts Receivable Inventory Buildings & Equipment Less: Accumulated Depreciation Investment in Saul Corporation Total Assets Cash Accounts Receivable Inventory Buildings & Equipment Less: Accumulated Depreciation Total Assets PENNY MANUFACTURING COMPANY Balance Sheet January 1, 20X1 $ 227,500 60,000 100,000 600,000 (150,000) 262,500 $1,100,000 Accounts Payable Bonds Payable $ 60,000 100,000 180,000 600,000 (240,000) $700,000 Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Equities SAUL CORPORATION Balance Sheet January 1, 20X1 Accounts Payable Bonds Payable Common Stock ($10 par) Additional Paid-In Capital Retained Earnings Total Liabilities & Equities $ 50,000 400,000 200,000 50,000 400,000 $1,100,000 $ 50,000 300,000 100,000 50,000 200,000 $700,000