Peer Corporation paid S64,000 to acquire 80% of Sizee Corporation's outstanding voting common stock at book...

      

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Peer Corporation paid S64,000 to acquire 80% of Sizee Corporation's outstanding voting common stock at book value on May 1, 2017. The stockholders' equity of Sizee on January 1, 2017 consisted of $40,000 Capital Stock and $20,000 Retained Earnings. Sizee's total dividends for 2017 were $6,000, paid equally on April 1 and October 1. Sizee's net income was earned uniformly throughout 2017. In 2017, pre- acquisition sales were $10,000 and pre-acquisition expenses were cost of sales for $5,000. (There were no other pre- acquisition expenses in 2017.) During 2017, Peer made sales of $20,000 to Sizee at a gross profit of $3,000. One-half of this merchandise was inventoried by Sizee at year-end. Peer sold equipment with a ten-year remaining useful life to Sizee at a $2,000 gain on December 31, 2017. The straight-line depreciation method is used by both companies. The equipment has no salvage value. Financial statements of Peer and Sizee Corporations for 2017 appear in the first two columns of the partially completed consolidation working papers. Required: •Compute with steps all the missing information •Complete the consolidating working papers for Peer Corporation and Subsidiary for the year ending December 31, 2017. TEliminations Consolidated Peer Sizee Debit Credit INCOME STATEMENT Sales Income of Sizee 100,000 S40,000 Gain on sale of equipment Cost of Sales and expenses Depreciation expense 2.000 (52,500) 21,000) (11,000) (4,000) Net income Retained Earnings 1/1 Add: Net income Less: Dividends Retained Earnings 12/31 15,000 60,000 20,000 15,000 10,000) 6,000) 29,000 BALANCE SHEET Receivables - net Inventories Buildings - net Equipment - net 19,000 16,000 20.500 22.000 25,000 20,000 40,000 22,000 2,000 Investment in Sizee TOTAL ASSETS S 80,000 Accounts payable 35,000 11,000 Capital Stock Retained Earnings 60,000 40,000 75,000 29,000 TOTAL LIAB. & EQUITY S 80,000 Peer Corporation paid S64,000 to acquire 80% of Sizee Corporation's outstanding voting common stock at book value on May 1, 2017. The stockholders' equity of Sizee on January 1, 2017 consisted of $40,000 Capital Stock and $20,000 Retained Earnings. Sizee's total dividends for 2017 were $6,000, paid equally on April 1 and October 1. Sizee's net income was earned uniformly throughout 2017. In 2017, pre- acquisition sales were $10,000 and pre-acquisition expenses were cost of sales for $5,000. (There were no other pre- acquisition expenses in 2017.) During 2017, Peer made sales of $20,000 to Sizee at a gross profit of $3,000. One-half of this merchandise was inventoried by Sizee at year-end. Peer sold equipment with a ten-year remaining useful life to Sizee at a $2,000 gain on December 31, 2017. The straight-line depreciation method is used by both companies. The equipment has no salvage value. Financial statements of Peer and Sizee Corporations for 2017 appear in the first two columns of the partially completed consolidation working papers. Required: •Compute with steps all the missing information •Complete the consolidating working papers for Peer Corporation and Subsidiary for the year ending December 31, 2017. TEliminations Consolidated Peer Sizee Debit Credit INCOME STATEMENT Sales Income of Sizee 100,000 S40,000 Gain on sale of equipment Cost of Sales and expenses Depreciation expense 2.000 (52,500) 21,000) (11,000) (4,000) Net income Retained Earnings 1/1 Add: Net income Less: Dividends Retained Earnings 12/31 15,000 60,000 20,000 15,000 10,000) 6,000) 29,000 BALANCE SHEET Receivables - net Inventories Buildings - net Equipment - net 19,000 16,000 20.500 22.000 25,000 20,000 40,000 22,000 2,000 Investment in Sizee TOTAL ASSETS S 80,000 Accounts payable 35,000 11,000 Capital Stock Retained Earnings 60,000 40,000 75,000 29,000 TOTAL LIAB. & EQUITY S 80,000

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