4. PROBLEM 3-6 In-Transit Items LO 8 On July 31, 2019, Ping Company purchased 90% of Santos Company's common stock for $2,010,000 cash. Immediately after the acquisition, the two companies' balance sheets were as follows: Ping Santos Cash $ 320,000 $ 150,000 Accounts receivable 600,000 300,000 Note receivable 100,000 -O- Inventory 1.840,000 400.000 Advance to Santos Company 60,000 -0 Investment in Santos Company 2,010,000 Plant and equipment (net) 3,000,000 1,500,000 Land 90.000 90.000 Total $8,020,000 $2,440,000 Accounts payable $ 800,000 $ 140,000 Notes payable 900,000 100,000 Common stock 2,400,000 900.000 Other contributed capital 2,200,000 680.000 Retained earnings 1,720,000 620,000 Total $8,020,000 $2,440,000 Santos Company has not yet recorded the $60,000 cash advance from Ping Company. Ping Company's accounts receivable include $20,000 due from Santos Company Santos Company's $100,000 note payable is payable to Ping Company Neither company has recorded $7,000 of interest accrued on the note from January 1 to July 31. Any difference between book value and the value implied by the purchase price relates to land. Required: Prepare a consolidated balance sheet workpaper on July 31, 2019 Answer: (Complete the table!) Ping Santos Eliminations Noncontrolling Consolidated Company Company Interest Balance Dr. Cr Cash 320,000 150,000 530,000 Accounts Receivable 600,000 300,000 Note Receivable 100.000 Inventory 1,840,000 400,000 Advance to Santos Company 60,000 Investment in Santos Company 2.010.000 Difference between Implied & Book Value Plant and Equipment 3,000,000 1,500,000 Land 90 000 90.000 Total Assets 8,020,000 2,440,000 8,370,333 Accounts Payable 800,000 140,000 Notes Payable 900,000 100.000 Common Stock Ping Company 2,400,000 2,400,000 Santos Company 900.000 Other Contributed Capital Ping Company 2,200,000 2,200,000 Santos Company 680,000 Retained Eamines Ping Company 1.720,000 1.727,000 Santos Company 620,000 Noncontrolling Interest 223.3334 223,333 Total 8,020,000 2440.000 Advance from Ping Company Interest Payable Interest Receivable Total Libilities and Equity 8 370 333 182,010,000/90 - ($900,000 + 5680,000+ $620,000 $7,000)) - $40,333; ** $2,010,000/ 90 x 10 - 223,333 (a) To establish reciprocity for cash advances (b) To adjust for unrecorded interest expense and interest payable (c) To adjust for unrecorded interest income and interest receivable. (1) To eliminate intercompany advances (2) To eliminate intercompany accounts receivable and accounts payable (3) To eliminate investment in Santos Company and create noncontrolling interest account (4) To eliminate intercompany interest receivable and interest payable (5) To eliminate intercompany note receivable and note payable (6) To allocate the difference between implied and book value to land