Pepsi Co., which is a calendar-year-reporting company, purchased 90% of the common stock of Sprite Co. for $270,000 on 1/1/20. On the acquisition date, the net assets of Sprite approximated their fair values of $300,000. Each company’s financial statements for the year ended 12/31/20 are presented on the Illustration #3a Worksheet which is included as a link with this assignment. Required: When submitting this assignment, both requirements below should be included on the excel worksheet provided. a. Present the journal entries made by Pepsi during 2020 to reflect the acquisition of Sprite and the equity method of accounting. b. Complete the “Illustration #3a Worksheet” to show the consolidation of Pepsi and Sprite on 12/31/20.

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Consolidation Date 12/31/20 Consolidation Entries Income Statement (2020) Pepsi Co. (750,000) 230,000 45,000 Sprite Co. (300,000) 175,000 10,000 40,000 Debit Credit Consolidated Sales Cost of sales Depreciation expense Other expenses 150,000 Income from Sprite (67,500) NCI in net income Net Income (392,500) (75,000) Statement of Retained Earnings Balances, beginning 1/1/20 (232,500) (392,500) 100,000 (525,000) (100,000) (75,000) 20,000 Net income Dividends declared Balances, 12/ 31/20 (155,000) Balance Sheet (as of 12/31/20) Cash 215,500 145,000 180,000 319,500 75,000 90,000 80,000 Accounts receivable Inventory Investment in Sprite Land Buildings and equipment Accumulated depreciation 175,000 715,000 (450,000) 130,000 145,000 (20,000) Total Assets 1,300,000 500,000 Payables and accruals Bonds payable (100,000) (175,000) (500,000) (525,000) (70,000) (75,000) (200,000) (155,000) Common stock Retained earnings NCI in net assets Total Liab. and Equity (1,300,000) (500,000) Consolidation Date 12/31/20 Consolidation Entries Income Statement (2020) Pepsi Co. (750,000) 230,000 45,000 Sprite Co. (300,000) 175,000 10,000 40,000 Debit Credit Consolidated Sales Cost of sales Depreciation expense Other expenses 150,000 Income from Sprite (67,500) NCI in net income Net Income (392,500) (75,000) Statement of Retained Earnings Balances, beginning 1/1/20 (232,500) (392,500) 100,000 (525,000) (100,000) (75,000) 20,000 Net income Dividends declared Balances, 12/ 31/20 (155,000) Balance Sheet (as of 12/31/20) Cash 215,500 145,000 180,000 319,500 75,000 90,000 80,000 Accounts receivable Inventory Investment in Sprite Land Buildings and equipment Accumulated depreciation 175,000 715,000 (450,000) 130,000 145,000 (20,000) Total Assets 1,300,000 500,000 Payables and accruals Bonds payable (100,000) (175,000) (500,000) (525,000) (70,000) (75,000) (200,000) (155,000) Common stock Retained earnings NCI in net assets Total Liab. and Equity (1,300,000) (500,000)