P Corporation acquired 70 percent ownership of S Company on January 1, 20X6, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 30 percent of the book value of S. On January 1, 20X8, Portfolio sold 1,000 shares of S Company for $20,000 to A Corporation and recorded a $5,000 gain. Trial balances for the companies on December 31, 20X8, contain the following data:

S Company's net income was earned evenly throughout the year. Both companies declared and paid their dividends on December 31, 20X8. P uses the fully adjusted equity method in accounting for its investment in S.

Required:

1. Prepare the elimination entries needed to complete a full consolidation worksheet for 20X8.
2. Prepare a consolidation worksheet for 20X8.
    

Transcribed Image Text:

P Corp. S Company Debit Credit Debit Credit Cash 70,000 20,000 Accounts Receivable 60,000 40,000 Inventory 80,000 60,000 Buildings and Equipment 400,000 200,000 Investment in S 114,000 Cost of Goods Sold 180,000 90,000 Depreciation 40,000 20,000 Expense Other Expenses 17,000 30,000 Dividends Declared 25,000 20,000 Accumulated $ 80,000 $ 60,000 Depreciation Accounts Payable 40,000 30,000 Bonds Payable 100,000 40,000 Common Stock ($5 par) 150,000 50,000 Additional Paid-In 75,000 10,000 Capital Retained Earnings 200,000 90,000 Sales 300,000 200,000 Gain on Sale of S 5,000 Company Stock Income from S 36,000 Company $ 986,000 $ 986,000 $ 480,000 $ 480,000 P Corp. S Company Debit Credit Debit Credit Cash 70,000 20,000 Accounts Receivable 60,000 40,000 Inventory 80,000 60,000 Buildings and Equipment 400,000 200,000 Investment in S 114,000 Cost of Goods Sold 180,000 90,000 Depreciation 40,000 20,000 Expense Other Expenses 17,000 30,000 Dividends Declared 25,000 20,000 Accumulated $ 80,000 $ 60,000 Depreciation Accounts Payable 40,000 30,000 Bonds Payable 100,000 40,000 Common Stock ($5 par) 150,000 50,000 Additional Paid-In 75,000 10,000 Capital Retained Earnings 200,000 90,000 Sales 300,000 200,000 Gain on Sale of S 5,000 Company Stock Income from S 36,000 Company $ 986,000 $ 986,000 $ 480,000 $ 480,000

Answer rating: 100% (QA)

Date Particulars Debit Credit Dividend income 14000 Noncontrolling interest of S co 6000 Dividend de... View the full answer