Pruitt Corporation acquired all of the voting stock of Soto Corporation on January 1, 2010, for $210,000 when Soto had common stock of $150,000 and retained earnings of $24,000. The excess of implied over book value was allocated $9,000 to inventories that were sold in 2010, $12,000 to equipment with a 4-year remaining useful life under the straight-line method, and the remainder to goodwill.

Financial statements for Pruitt and Soto Corporations at the end of the fiscal year ended December 31, 2011 (two years after acquisition), appear in the first two columns of the partially completed consolidated statements workpaper. Pruitt Corp. has accounted for its investment in Soto using the partial equity method of accounting.

 

 
 

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Required: Complete the consolidated statements workpaper for Pruitt Corporation and Soto Corporation for December 31, 2011. Pruitt Corporation and Soto Corporation Consolidated Statements Workpaper at December 31, 2011 Elimin ations Pruitt Soto Consolidated Balances Debit Credit Corp. Corp. INCOME STATEMENT Sales Equity from Subsidiary Income Cost of Sales 618.000 180,000 36.000 (450,000) (90,000) Other Expenses (114.000) (54.000) Net Income to Ret. Earn. 90.000 36.000 Pruitt Retained Eamings 1/1 72,000 Soto Retained Earnings 1/1 3,000 Add: Net Income 90,000 36,000 Less: Dividends (60.000) (12.000) Retained Earnings 12/31 102.000 54.000 BALANCE SHEET Cash 42,000 21,000 Inventories 63,000 45,000 Land 33,000 18.000 Equipment and Buildings-net Investment in Soto Corp Total Assets 192,000 165,000 240.000 570,000 LIA & EQUITIES Liabilities 168.000 45,000 Common Stock 300,000 150,000 Retained Earnings 102.000 54,000 Total Equities 570.000 249.000 Required: Complete the consolidated statements workpaper for Pruitt Corporation and Soto Corporation for December 31, 2011. Pruitt Corporation and Soto Corporation Consolidated Statements Workpaper at December 31, 2011 Elimin ations Pruitt Soto Consolidated Balances Debit Credit Corp. Corp. INCOME STATEMENT Sales Equity from Subsidiary Income Cost of Sales 618.000 180,000 36.000 (450,000) (90,000) Other Expenses (114.000) (54.000) Net Income to Ret. Earn. 90.000 36.000 Pruitt Retained Eamings 1/1 72,000 Soto Retained Earnings 1/1 3,000 Add: Net Income 90,000 36,000 Less: Dividends (60.000) (12.000) Retained Earnings 12/31 102.000 54.000 BALANCE SHEET Cash 42,000 21,000 Inventories 63,000 45,000 Land 33,000 18.000 Equipment and Buildings-net Investment in Soto Corp Total Assets 192,000 165,000 240.000 570,000 LIA & EQUITIES Liabilities 168.000 45,000 Common Stock 300,000 150,000 Retained Earnings 102.000 54,000 Total Equities 570.000 249.000

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Pruitt Corporation and Soto Corporation Consolidated Statements Workpaper at December 31 2011 Elimin... View the full answer