On January 1, 2023, the Smith Company exchanged $500,000 cash for 100% of the outstanding voting...

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On January 1, 2023, the Smith Company exchanged $500,000 cash for 100% of the outstanding voting stock of the Jones Company. On the acquisition date, Jones Company had net equity consisting of the following: Common Stock Retained Earnings $300,000 120,000 Smith then prepared the following fair value allocations: Equipment, with a remaining life of 6 years was undervalued by $60,000. All other assets and liabilities are fairly reported. During 2023, Jones Company reported earnings of $46,000 and paid cash dividends totaling $10,000. The financial statements for the two companies as of December 31, 2023 is presented on the worksheet, below. Required: complete the worksheet to consolidate the financial information of these two companies as of December 31, 2023. Smith Company AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 2023 Consolidation Entries Income Statement Smith Jones Debit Revenues (6,400,000) (900,000) Cost of goods sold 3,906,000 500,000 Depreciation expense 875,000 200,000 Amortization expense. 430,000 114,000 Interest expense 55,000 40,000 Credit Balances Equity earnings in Jones (36,000) Net income (1,170,000) (46,000) Statement of Retained Earnings Retained earnings 1/1 (5,340,000) (120,000) Net income (above) (1,170,000) (46,000) I Dividends declared 560,000 10,000 Retained earnings 12/31 (5,950,000) (156,000) Balance Sheet Cash 70,000 143,000 Accounts receivable 950,000 200,000 Inventories 1,700,000 780,000 Investment in Mathias 526,000 Equipment (net) 3,700,000 1,005,000 Patents 90,000 Unpatented technology 2,125,000 450,000 Goodwill 400,000 Total assets 9,561,000 2,578,000 Current liabilities Long-term debt (1,000,000) (1,200,000) (500,000) (922,000) Common stock Retained earnings 12/31 Total liabilities and equity (4,200,000) (300,000) (3,861,000) (156,000) (9,561,000) (2,578,000) On January 1, 2023, the Smith Company exchanged $500,000 cash for 100% of the outstanding voting stock of the Jones Company. On the acquisition date, Jones Company had net equity consisting of the following: Common Stock Retained Earnings $300,000 120,000 Smith then prepared the following fair value allocations: Equipment, with a remaining life of 6 years was undervalued by $60,000. All other assets and liabilities are fairly reported. During 2023, Jones Company reported earnings of $46,000 and paid cash dividends totaling $10,000. The financial statements for the two companies as of December 31, 2023 is presented on the worksheet, below. Required: complete the worksheet to consolidate the financial information of these two companies as of December 31, 2023. Smith Company AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet For Year Ending December 31, 2023 Consolidation Entries Income Statement Smith Jones Debit Revenues (6,400,000) (900,000) Cost of goods sold 3,906,000 500,000 Depreciation expense 875,000 200,000 Amortization expense. 430,000 114,000 Interest expense 55,000 40,000 Credit Balances Equity earnings in Jones (36,000) Net income (1,170,000) (46,000) Statement of Retained Earnings Retained earnings 1/1 (5,340,000) (120,000) Net income (above) (1,170,000) (46,000) I Dividends declared 560,000 10,000 Retained earnings 12/31 (5,950,000) (156,000) Balance Sheet Cash 70,000 143,000 Accounts receivable 950,000 200,000 Inventories 1,700,000 780,000 Investment in Mathias 526,000 Equipment (net) 3,700,000 1,005,000 Patents 90,000 Unpatented technology 2,125,000 450,000 Goodwill 400,000 Total assets 9,561,000 2,578,000 Current liabilities Long-term debt (1,000,000) (1,200,000) (500,000) (922,000) Common stock Retained earnings 12/31 Total liabilities and equity (4,200,000) (300,000) (3,861,000) (156,000) (9,561,000) (2,578,000)

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Smith Company and Consolidated Subsidiary Consolidation Worksheet For Year Ending December 31 2023 Income Statement Smith Jones Consolidation Entries ... View the full answer