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Priya Corporation acquired 100 percent of Sheldon Company stock on January 1, 2020 for $720,000 cash. Following are pre-closing trial balance amounts for Priya Corporation and Sheldon Company as of December 31, 2020: SHELDON CORPORATION Debit Credit $221,000 204,000 159,000 Cash Accounts Receivable Inventory Investment in Sheldon Corp. Buildings Land Equipment Cost of Goods Sold Depreciation Expense, Building Depreciation Expense, Equipment Selling & Administrative Expense Dividends Declared Accumulated Depreciation, Bldg Accumulated Depreciation, Equip Accounts Payable Bonds Payable Common Stock ($1 par) Additional Paid In Capital Retained Earnings (01/01/2020) Sales Income from Sheldon Corp. PRIYA CORPORATION Debit Credit $753,600 294,000 473,000 786,000 625,000 773,900 531,000 382,000 62,500 53,100 173,000 68,000 $187,500 265,500 178,000 500,000 600,000 1,578,200 809,000 740,900 116,000 $4,975,100 $4,975,100 296,000 195,900 276,000 234,000 41,700 23,100 157,200 50,000 $166,800 115,500 174,900 108,700 165,000 309,000 246,000 572,000 $1,857,900 $1,857,900 Additional Information: 1. On January 1, 2020, the book values of Sheldon's net assets and liabilities approximated fair values. 2. Priya Corporation uses the equity method to account for its Investment in Sheldon Company. 3. The general ledger numbers given above (HINT: those in boldface) include the effects of the JOURNAL ENTRIES that were recorded by Priya at the acquisition date and during 2020 to account for its investment in Sheldon Company. These boldface figures should be used as check figures for your solution. REQUIRED: (CLEARLY SHOW ALL OF YOUR WORK). a. Prepare the Investment Analysis for Priya Company's Investment in Sheldon account AT JANUARY 1, 2020 (3 POINTS) Fair Value of Consideration given from Priya Company to Sheldon's Shareholders: Fair Value of Any Noncontrolling Interest $ $ 720,000 = Total Fair Value Book Value of Sheldon Company's Net Identifiable Assets $ (720,000) $ Differential (if any) Identifiable Excess (if any) New Goodwill (if any) b. Recreate the JOURNAL ENTRIES recorded by Priya to account for its investment in Sheldon Company at January 1, 2020 and during 2020. (8 POINTS) c. Using your information from b. above, calculate the 12/31/20 balances for Priya Company's Investment in Sheldon and Income from Sheldon accounts. Use the T accounts provided below. (4 POINTS) Priya Company's General Ledger Investment in Sheldon Income from Sheldon d. Prepare the necessary CONSOLIDATION WORKSHEET ENTRY (or ENTRIES if you choose to prepare the optional accumulated depreciation entry) at December 31, 2020. (9 POINTS) e. Prepare the consolidation worksheet for the period ended December 31, 2020. You may use either the template provided below or on the next page. (16 POINTS) PRIYA CORPORATION Consolidation Worksheet For the Period Ending December 31, 2020 PRIYA'S G/L SHELDON'S G/L CONSOLIDATION ENTRIES Debit Credit Consolidated Totals Accounts 740,900 (382,000) Income Statement Sales Less: Cost of Goods Sold Less: Depreciation Expense, Building Less: Depreciation Expense, Equipment Less: Selling & Administrative Expense Income from Sheldon Corp. Net Income $ $ $ $ $ $ $ (62,500) (53,100) (173,000) 116,000 186,300 S $ $ S $ 572,000 (234,000) (41,700) (23,100) (157,200) $ 116,000 Statement of Retained Earnings Retained Earnings (01/01/2020) Net Income (above) Dividends Declared Retained earnings, 12/31/20 $ $ $ $ 809,000 186,300 (68,000) 927,300 $ $ $ S 246,000 116,000 (50,000) 312,000 S $ S 221,000 204,000 159,000 Balance Sheet Cash Accounts Receivable Inventory Investment in Sheldon Corp. Buildings Land Equipment Accumulated Depreciation, Bldg Accumulated Depreciation, Equip Total Assets $ $ $ $ $ $ $ $ $ $ 753,600 294,000 473,000 786,000 625,000 773,900 531,000 (187,500) (265,500) 3,783,500 $ $ S $ $ S 296,000 195,900 276,000 (166,800) (115,500) 1,069,600 Accounts Payable Bonds Payable Common Stock ($1 par) Additional Paid In Capital Retained earnings, 12/31/20 (above) Total Liabilities & Stockholders' Equity $ $ $ $ $ $ 178,000 500,000 600,000 1,578,200 927,300 3,783,500 S $ $ $ $ S 174,900 108,700 165,000 309,000 312,000 1,069,600 NET ASSETS ASSETS - LIABILITIES TOTAL STOCKHOLDERS' EQUITY 3 ** OR** PRIYA CORPORATION Consolidation Worksheet For the Period Ending December 31, 2020 PRIYA'S G/L SHELDON'S G/L CONSOLIDATION ENTRIES Debit Credit Consolidated Totals Accounts Income Statement Sales Less: Cost of Goods Sold Less: Depreciation Expense, Building "Less: Depreciation Expense, Equipment Less: Selling & Administrative Expense Income from Sheldon Corp. Net Income S $ S s $ $ $ 740,900 (382,000) (62,500) (53,100) (173,000) 116,000 186,300 $ $ $ $ $ 572,000 (234,000) (41,700) (23,100) (157,200) $ 116,000 Statement of Retained Earnings Retained Earnings (01/01/2020) Net income (above) Dividends Declared Retained earnings, 12/31/20 $ S $ $ 809,000 186,300 (68,000) $ $ $ $ 246,000 116,000 (50,000) 312,000 927,300 $ $ $ 221,000 204,000 159,000 Balance Sheet Cash Accounts Receivable Inventory Investment in Sheldon Corp. Buildings Land Equipment Accumulated Depreciation, Bldg Accumulated Depreciation, Equip Total Assets S S $ $ $ $ S $ $ $ 753,600 294,000 473,000 786,000 625,000 773,900 531,000 (187,500) (265,500) 3,783,500 $ S $ $ $ S 296,000 195,900 276,000 (166,800) (115,500) 1,069,600 Accounts Payable Bonds Payable Common Stock ($1 par) Additional Paid in Capital Retained earnings, 12/31/20 (above) Total Liabilities & Stockholders' Equity $ $ S $ $ S 178,000 500,000 600,000 1,578,200 927,300 3,783,500 $ $ S $ $ $ 174,900 108,700 165,000 309,000 312,000 1,069,600 NET ASSETS ASSETS - LIABILITIES TOTAL STOCKHOLDERS' EQUITY 4