Problem 3-13 (LO 4, 5) 100%, sophisticated equity method, several excesses, third year. Refer to the preceding information for Pcraft’s acquisition of Sailair’s common stock. Assume that Pcraft paid $500,000 for 100% of Sailair common stock. Pcraft uses the sophisticated equity method to account for its investment in Sailair. Pcraft and Sailair had the following trial balances on December 31, 20X3:

Pcraft Sailair Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 60,000 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000 55,000 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 86,000 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 60,000 Investment in Sailair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 561,600 Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000 300,000 Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (220,000) (80,000)

Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 100,000 Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (90,000) (72,000)

Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (60,000) (102,000)

Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (100,000)

Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (100,000) (10,000)

Paid-In Capital in Excess of Par . . . . . . . . . . . . . . . . . . . . . . . . . . . . (900,000) (90,000)

Retained Earnings, Jan. 1, 20X3 . . . . . . . . . . . . . . . . . . . . . . . . . . . (363,400) (182,000)

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (800,000) (350,000)

Cost of Goods Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000 210,000 Depreciation Expense—Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 15,000