In January 1, 2015, Puma Company acquired an 80% interest in Shoes Company for a purchase...

  

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In January 1, 2015, Puma Company acquired an 80% interest in Shoes Company for a purchase price that was $350,000 over the book value of Shoes's Stockholders' Equity on the acquisition date. Spring uses the equity method to account for its investment in Shoes. Puma assigned the acquisition-date AAP as follows: AAP items Patent Goodwill Initial Fair Value 200,000 150,000 $350,000 Shoes sells inventory to Puma (upstream) which includes that inventory in products that it (Puma), ultimately, sells to customers outside of the controlled group. You have compiled the following data as of 2020 and 2021: Transfer price for inventory sale Cost of goods sold Gross profit 2021 $ 356,500 (316.500) $ 40,000 25% 35% % inventory remaining Gross profit deferred $ 9,000 $ 14,000 EOY Receivable/Payable $ 55,000 $ 65,000 The inventory not remaining at the end of the year has been sold outside of the controlled group. Puma and Shoes report the following financial statements at December 31, 2021: Income Statement Sales Cost of goods sold Gross Profit Income (loss) from subsidiary Operating expenses Net income BOY Retained Earnings Net income Useful Life (years) 10 Indefinite Dividends EOY Retained Earnings 2020 $ 305,500 (269,500) $ 36,000 Puma $ 5,660,000 (3.830.000) 1,830,000 185,600 (1.045.200) $ 970,400 Statement of Retained Earnings Puma $6,464,800 970,400 (105,400) $7.329.800 Shoes $ 1,160,000 (687.500) 472,500 (215.500) 257.000 Shoes $2,385,000 257,000 (25.000) $2.617.000 Assets: Cash Accounts receivable Inventory Equity Investment PPE, net Balance Sheet Liabilities and Stockholders' Equity: Current Liabilities Long-term Liabilities Common Stock APIC Retained Earnings Puma $ 978,400 1,142,300 1,515,400 2,571,200 5.934,800 $12,142,100 $ 689,700 2,054,000 853,600 1,215,000 7,329,800 $12.142.100 Shoes $ 474,200 702,700 622,900 1.802.300 $3,602,100 $ 204,600 379,500 92,100 308,900 2,617,000 $3.602.100 REQUIRED: a. Prepare all necessary consolidation entries for 2021. b. Prepare a consolidated income statement, consolidated statement of retained earnings, and consolidated balance sheet. In January 1, 2015, Puma Company acquired an 80% interest in Shoes Company for a purchase price that was $350,000 over the book value of Shoes's Stockholders' Equity on the acquisition date. Spring uses the equity method to account for its investment in Shoes. Puma assigned the acquisition-date AAP as follows: AAP items Patent Goodwill Initial Fair Value 200,000 150,000 $350,000 Shoes sells inventory to Puma (upstream) which includes that inventory in products that it (Puma), ultimately, sells to customers outside of the controlled group. You have compiled the following data as of 2020 and 2021: Transfer price for inventory sale Cost of goods sold Gross profit 2021 $ 356,500 (316.500) $ 40,000 25% 35% % inventory remaining Gross profit deferred $ 9,000 $ 14,000 EOY Receivable/Payable $ 55,000 $ 65,000 The inventory not remaining at the end of the year has been sold outside of the controlled group. Puma and Shoes report the following financial statements at December 31, 2021: Income Statement Sales Cost of goods sold Gross Profit Income (loss) from subsidiary Operating expenses Net income BOY Retained Earnings Net income Useful Life (years) 10 Indefinite Dividends EOY Retained Earnings 2020 $ 305,500 (269,500) $ 36,000 Puma $ 5,660,000 (3.830.000) 1,830,000 185,600 (1.045.200) $ 970,400 Statement of Retained Earnings Puma $6,464,800 970,400 (105,400) $7.329.800 Shoes $ 1,160,000 (687.500) 472,500 (215.500) 257.000 Shoes $2,385,000 257,000 (25.000) $2.617.000 Assets: Cash Accounts receivable Inventory Equity Investment PPE, net Balance Sheet Liabilities and Stockholders' Equity: Current Liabilities Long-term Liabilities Common Stock APIC Retained Earnings Puma $ 978,400 1,142,300 1,515,400 2,571,200 5.934,800 $12,142,100 $ 689,700 2,054,000 853,600 1,215,000 7,329,800 $12.142.100 Shoes $ 474,200 702,700 622,900 1.802.300 $3,602,100 $ 204,600 379,500 92,100 308,900 2,617,000 $3.602.100 REQUIRED: a. Prepare all necessary consolidation entries for 2021. b. Prepare a consolidated income statement, consolidated statement of retained earnings, and consolidated balance sheet.

Answer rating: 100% (QA)

aPuma Company and Subsidiary Consolidated Balance Sheet Assets Cash 1142300 Accounts receivable 1515400 Inventory 2571200 Equity investment in Shoes C... View the full answer