On January 1, 2018, Phelps Company purchased an 85% interest

On January 1, 2018, Phelps Company purchased an 85% interest in Sloane Company for $955,000 when the retained earnings of Sloane Company were $150,000. The difference between implied and book value was assigned as follows:

Inventory....................................................$48,000
Land..............................................................36,000
Discount on Bonds Payable.......................48,000
Goodwill.......................................................91,529

One-half of the inventory was sold in 2018 and the remaining inventory was sold in 2019. The bonds mature in eight years.

On December 31, 2018, Phelps Company’s inventory contained $10,000 in unrealized intercompany profit. During 2019 Phelps Company sold merchandise with a cost of $200,000 to Sloane Company at a 30% markup on cost. Only $65,000 (selling price) of this merchandise remains in Sloane Company’s 2019 ending inventory. As of December 31, 2019, Sloane Company owes Phelps Company $40,000 for merchandise purchased during 2019.

Equipment with a book value of $500,000 was sold by Sloane Company on January 2, 2019, to Phelps Company for $640,000. This equipment had an estimated useful life when purchased by Sloane Company on July 1, 2016, of 10 years.

Financial data for 2019 are presented here:

Phelps Company Sloane Company $ 560,000 Sales Other Income Dividend Income $1,291,500 140,000 42,500 Total Revenue 1,334

Cost of Goods Sold 660,000 300,000 Depreciation Expense 138,000 20,000 Interest Expense 8,000 10,000 Other Expenses Tota


Required:

Prepare a consolidated financial statements workpaper for the year ended December 31, 2019.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...

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