POSEY MANUFACTURING COMPANY AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X7 Consolidation Entries Posey Co. Stargell
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POSEY MANUFACTURING COMPANY AND SUBSIDIARY | |||||
Consolidated Financial Statement Worksheet | |||||
December 31, 20X7 | |||||
Consolidation Entries | |||||
Posey Co. | Stargell Corp. | DR | CR | Consolidated | |
Income Statement | |||||
Sales | |||||
Other Income | |||||
Less: COGS | |||||
Less: Depr. & Amort. Expense | |||||
Less: Other Expenses | |||||
Goodwill Impairment Loss | |||||
Gain on Bond Retirement | |||||
Income from Stargell Corp. | |||||
Consolidated Net Income | |||||
NCI in Net Income | |||||
Controlling Interest in NI | |||||
Statement of Retained Earnings | |||||
Beginning Balance | |||||
Net Income | |||||
Less: Dividends Declared | |||||
Ending Balance | |||||
Balance Sheet | |||||
Assets | |||||
Cash | |||||
Current Receivables | |||||
Inventory | |||||
Land | |||||
Buildings & Equipment | |||||
Less: Accumulated Depreciation | |||||
Investment in Stargell Stock | |||||
Investment in Stargell Bonds | |||||
Investment in Posey Bonds | |||||
Goodwill | |||||
Total Assets | |||||
Liabilities & Equity | |||||
Current Payables | |||||
Bonds Payable | |||||
Premium on Bonds Payable | |||||
Common Stock | |||||
Premium on Common Stock | |||||
Retained Earnings | |||||
NCI in NA of Stargell Corp. | |||||
Total Liabilities & Equity |
On December 31, 20X7, trial balances for Posey and Stargell appeared as follows: | |||||||||
Posey Manufacturing | Stargell Corporation | ||||||||
Item | Debit | Credit | Debit | ||||||
Cash | $49,500 | $39,000 | |||||||
Current Receivables | 121,500 | 90,100 | |||||||
Inventory | 317,000 | 364,900 | |||||||
Investment in Stargell Stock | 1,243,800 | ||||||||
Investment in Stargell Bonds | 985,000 | ||||||||
Investment in Posey Bonds | 200,000 | ||||||||
Land | 1,241,000 | 518,000 | |||||||
Buildings & Equipment | 2,940,000 | 1,915,000 | |||||||
Cost of Goods Sold | 1,829,000 | 426,000 | |||||||
Depreciation & Amortization | 184,000 | 65,000 | |||||||
Other Expenses | 632,000 | 206,000 | |||||||
Dividends Declared | 61,000 | 51,000 | |||||||
Accumulated Depreciation | $1,050,000 | $597,000 | |||||||
Current Payables | 699,190 | 213,000 | |||||||
Bonds Payable | 200,000 | 1,000,000 | |||||||
Premium on Bonds Payable | 3,000 | ||||||||
Common Stock | 910,000 | 487,000 | |||||||
Premium on Common Stock | 610,000 | 267,000 | |||||||
Retained Earnings, January 1 | 2,848,950 | 457,000 | |||||||
Sales | 3,010,000 | 801,000 | |||||||
Other Income | 143,000 | 50,000 | |||||||
Income from Stargell Corp. | 132,660 | ||||||||
Total | $9,603,800 | $9,603,800 | $3,875,000 | $3,875,000 |
Posey Manufacturing Company acquired 90% of Stargell Corporation’s outstanding common stock on December 31, 20X5, for $1,116,900. At that date, the fair value of the noncontrolling interest was $124,100, and Stargell reported common stock outstanding of $487,000, premium on common stock of $267,000, and retained earnings of $407,000. The book values and fair values of Stargell’s assets and liabilities were equal except for land, which was worth $30,000 more than its book value. | ||||||||||||
On April 1, 20X6, Posey issued at par $200,000 of 10% bonds directly to Stargell; interest on the bonds is payable March 31 and September 30. On January 2, 20X7, Posey purchased all of Stargell’s outstanding 10-year, 12% bonds from an unrelated institutional investor at 98. The bonds originally had been issued on January 2, 20X1, for 101. Interest on the bonds is payable December 31 and June 30. | ||||||||||||
Since the date it was acquired by Posey Manufacturing, Stargell has sold inventory to Posey on a regular basis. The amount of such intercompany sales totaled $67,000 in 20X6 and $83,000 in 20X7, including a 30% gross profit. All inventory transferred in 20X6 had been resold by December 31, 20X6, except inventory for which Posey had paid $18,000 and did not resell until January 20X7. All inventory transferred in 20X7 had been resold at December 31, 20X7, except merchandise for which Posey had paid $16,667 | ||||||||||||
As of December 31, 20X7, Stargell had declared but not yet paid its fourth-quarter dividend of $12,750. Both Posey and Stargell use straight-line depreciation and amortization, including the amortization of bond discount and premium. On December 31, 20X7, Posey’s management reviewed the amount attributed to goodwill as a result of its purchase of Stargell common stock and concluded that an impairment loss in the amount of $25,000 had occurred during 20X7 and should be shared proportionately between the controlling and noncontrolling interests. Posey uses the fully adjusted equity method to account for its investment in Stargell. |
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
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