Plessor Industries acquired 80% of the outstanding common stock of Slammer Company on January 1, 2011, for $320,000. On that date, Slammer’s book values approximated fair values, and the balance of its retained earnings account was $80,000. Any excess was attributed to goodwill. Slammer’s net income was $20,000 for 2011 and $30,000 for 2012. No dividends were paid in either year. On January 1, 2012, Slammer signed a 5-year lease with Plessor for the rental of a small factory building with a 10-year life. Payments of $25,000 are due at the beginning of each year on January 1, and Slammer is expected to exercise the $5,000 bargain purchase option at the end of the fifth year. The fair value of the factory was $103,770 at the start of the lease term. Plessor’s implicit rate on the lease is 12%.

A second lease agreement, for the rental of production equipment with an 8-year life, was signed by Slammer on January 1, 2013. The terms of this 4-year lease require a payment of $15,000 at the beginning of each year on January 1. The present value of the lease payments at Plessor’s 12% implicit rate was equal to the fair value of the equipment, $52,298, when the lease was signed. The cost of the equipment to Plessor was $45,000, and there is a $2,000 bargain purchase option. Eight-year, straight-line depreciation is being used, with no salvage value.

The following trial balances were prepared by the separate companies at December 31, 2013:

Required
Prepare the worksheet necessary to produce the consolidated financial statements of Plessor Industries and its subsidiary for the year ended December 31, 2013. Include the determination and distribution of excess and income distribution schedules.

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Slammer Industies Company Plessor 60,000 40,745 97,778 76,000 140,000 120,000 127,000 (14,417) 320,000 ash . Minimum Lease Payments Receivable . . . . . . . . . . . . . .. . . .. . . Assets Under Capital Lease . . . . . . . . . . . . . . . Accumulated Depreciation-Assets Under Capital Lease. . Property, Plant, and Equipment. . 156,068 (27,291) 1,900,000 310,000 .. Accounts Payable includes accrued interest payable) .. . Common Stock ($10 par) Retained Earnings, January 1 , 201 3 . . .. . ..(148,000) (45,065) (100,520) (700,000) (300,000) (325,000) (295,000) 130,000) (7,298) (12,063) Cost of Goods Sold Interest Expense 780,000 380,000 12,063 510,000 165,000 (12,000) 56,000 15,000 Totals