Pommu Corporation paid $78,000 for a 60% interest in Schtick Inc. on January 1, 2014, when Schtick's Capital Stock was $80,000 and its Retained Earnings $20,000. The fair values of Schtick's identifiable assets and liabilities were the same as the recorded book values on the acquisition date. Trial balances at the end of the year on December 31, 2014 are given below:

During 2014, Pommu made only two journal entries with respect to its investment in Schtick. On January 1, 2014, it debited the Investment in Schtick account for $78,000 and on November 1, 2014, it credited Dividend Income for $6,000. Part 1: Prepare a consolidated income statement and a statement of retained earnings for Pommu and Subsidiary for the year ended December 31, 2014. Part 2: Prepare a consolidated balance sheet for Pommu and Subsidiary as of December 31, 2014.

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Cash Accounts Receivable Inventory Investment in Schtick Cost of Goods Sold Operating Expenses Dividends Liabilities Capital stock, $10 par value Additional Paid-in Capital Retained Earnings Sales Revenue Dividend Income Pommu $4,500 24,000 100,000 78,000 71,500 22,000 15,000 $315,000 $47,000 100,000 11,000 31,000 120,000 6,000 $315,000 Schtick $20,000 30,000 70,000 50,000 37,000 10,000 $217,000 $27,000 80,000 20,000 90,000 $217,000 Cash Accounts Receivable Inventory Investment in Schtick Cost of Goods Sold Operating Expenses Dividends Liabilities Capital stock, $10 par value Additional Paid-in Capital Retained Earnings Sales Revenue Dividend Income Pommu $4,500 24,000 100,000 78,000 71,500 22,000 15,000 $315,000 $47,000 100,000 11,000 31,000 120,000 6,000 $315,000 Schtick $20,000 30,000 70,000 50,000 37,000 10,000 $217,000 $27,000 80,000 20,000 90,000 $217,000

Answer rating: 100% (QA)

Consolidated Income Statement of Pommu and Subsidiary Partilulars Amount Pommu Schtick Consolidated ... View the full answer