Peeves Corporation paid $4,000,000 in cash for an 80 percent interest in Jeeves Corporation on January...

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Peeves Corporation paid $4,000,000 in cash for an 80 percent interest in Jeeves Corporation on January 1. 2016, when Jeeves' common stock was at $2,500,000 and retained earnings were at $500,000. Com- parative balance sheet data for Peeves and Jeeves Corporations at December 31, 2016, are as follows (in thousands): Assets Cash Receivables-net Dividend receivable Inventories Land Equipment-net Investment in Jeeves Equities Accounts payable Dividend payable Common stock, $10 par Retained earnings Peeves $90 250 40 2,250 800 1.500 4,032 $8.962 $110 5,000 3,852 $8.962 Jeeves $70 300 1,100 550 1.400 $3,420 $120 50 2,500 750 $3,420 In 2016, undervalued inventory of $150,000 was sold, and equipment with a four-year remaining useful life was undervalued by $240,000. Additionally, Peeves' separate net income was at $900,000, while that of Jeeves' was $250,000. Jeeves declared dividends of $50,000, and $50,000 of Peeves' accounts receiv- able is from Jeeves. REQUIRED 1. Prepare consolidated balance sheet workpapers for Peeves Corporation and Subsidiary at December 31. 2016. 2. Calculate the consolidated net income for 2016. Peeves Corporation paid $4,000,000 in cash for an 80 percent interest in Jeeves Corporation on January 1. 2016, when Jeeves' common stock was at $2,500,000 and retained earnings were at $500,000. Com- parative balance sheet data for Peeves and Jeeves Corporations at December 31, 2016, are as follows (in thousands): Assets Cash Receivables-net Dividend receivable Inventories Land Equipment-net Investment in Jeeves Equities Accounts payable Dividend payable Common stock, $10 par Retained earnings Peeves $90 250 40 2,250 800 1.500 4,032 $8.962 $110 5,000 3,852 $8.962 Jeeves $70 300 1,100 550 1.400 $3,420 $120 50 2,500 750 $3,420 In 2016, undervalued inventory of $150,000 was sold, and equipment with a four-year remaining useful life was undervalued by $240,000. Additionally, Peeves' separate net income was at $900,000, while that of Jeeves' was $250,000. Jeeves declared dividends of $50,000, and $50,000 of Peeves' accounts receiv- able is from Jeeves. REQUIRED 1. Prepare consolidated balance sheet workpapers for Peeves Corporation and Subsidiary at December 31. 2016. 2. Calculate the consolidated net income for 2016.

Answer rating: 100% (QA)

Statement of Net Assets of Subsidiary Jeeves Particulars Date of Acquisition 01012016 Period 12 mont... View the full answer