Exercise 6 (LO 4) Sophisticated equity method, second year, eliminations, income statement. The trial balances of Parker and Sargent companies of Exercise 5 for December 31, 2016, are presented as follows: Parker Sargent

Parker & sargent

Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,000 115,000

Depreciable Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 200,000

Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (130,000) (40,000)

Investment in Sargent Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000

Current Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (80,000)

Common Stock ($10 par) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (300,000) (100,000)

Retained Earnings, January 1, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (256,000) (170,000)

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (240,000) (100,000)

Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000 85,000

Subsidiary Income (from Sargent Company). . . . . . . . . . . . . . . . . . . . . . . (8,000)

Dividends Declared. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0

Parker Company continues to use the sophisticated equity method. 1. Prepare all the eliminations and adjustments that would be made on the 2016 consolidated worksheet. 2. If you did not solve Exercise 4, prepare the 2016 consolidated income statement and its related income distribution schedules. Exercise 7 (LO 3) Cost method, first year, eliminations