Pretzel Corporation acquired 100 percent of Stick Company’s outstanding shares on January 1, 20X7. Balance sheet data for the two companies immediately after the purchase follow:

	Pretzel Corporation				Stick Company
Cash	$	87,000			$	31,000
Accounts Receivable		96,000				53,000
Inventory		87,000				83,000
Buildings & Equipment		419,000				289,000
Less: Accumulated Depreciation		(150,000	)			(89,000	)
Investment in Stick Company		318,000
Investment in Stick Company Bonds		58,000
Total Assets	$	915,000			$	367,000
Accounts Payable	$	58,000			$	24,000
Bonds Payable		189,000				118,000
Common Stock		296,000				155,000
Capital in Excess of Par						145,000
Retained Earnings		372,000				(75,000	)
Total Liabilities & Equities	$	915,000			$	367,000

As indicated in the parent company balance sheet, Pretzel purchased $58,000 of Stick’s bonds from the subsidiary at par value immediately after it acquired the stock. An analysis of intercompany receivables and payables also indicates that the subsidiary owes the parent $11,000. On the date of combination, the book values and fair values of Stick’s assets and liabilities were the same.

Required:
a. Prepare all consolidation entries needed to prepare a consolidated balance sheet for January 1, 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) ( 1. Record the basic consolidation entry, 2. Record the excess value, 3. Record the entry to eliminate the intercompany accounts for Bonds Payable. 4.Record the entry to eliminate the remaining intercompany accounts. 5. Record the optional accumulated depreciation consolidation entry.)

b. Complete a consolidated balance sheet worksheet. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)

c. Prepare a consolidated balance sheet. (Amounts to be deducted should be entered with a minus sign.)

Answer rating: 100% (QA)

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