Selby had capital stock outstanding of $400,000 and retained earnings of $400,000. The fair value of Selby
Question:
Selby had capital stock outstanding of $400,000 and retained earnings of $400,000. The fair value of Selby Company’s assets and liabilities is equal to their book value except for the following:
One- half of the inventory was sold in 2023; the remainder was sold in 2024. At the end of 2023, Perry Company had in its ending inventory $54,000 of merchandise it had purchased from Selby Company during the year. Selby Company sold the merchandise at 20% above cost. During 2024, Perry Company sold merchandise to Selby Company for $300,000 at a markup of 20% of the selling price. At December 31, 2024, Selby still had merchandise that it purchased from Perry Company for $78,000 in its inventory. Financial data for 2024 are presented here:
Required:
A. Prepare the consolidated statements workpaper for the year ended December 31, 2024.
B. Calculate consolidated retained earnings on December 31, 2024, using the analytical or t- account approach.
Step by Step Answer:
Part A Income Statement Sales Equity in subsidiary income Total revenue Cost of goods sold Beginning inventory Purchases Cost of goods available Less ending inventory Cost of goods sold Other expenses ...View the full answer
