The following diagram depicts the relationships among Mary Company, John Company, and Joan Company on December...

 

  
 

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The following diagram depicts the relationships among Mary Company, John Company, and Joan Company on December 31, 2018: Mary Owns 60% Owns 40% John Joan Owns 50% Mary Company purchases its interest in John Company on January 1, 2016, for $204,000. John Company purchases its interest in Joan Company on January 1, 2017, for $75,000. Mary Company purchases its interest in Joan Company on January 1, 2018, for $72,000. All invest- ments are accounted for under the equity method. Control over Joan Company does not occur until the January 1, 2018, acquisition. Thus, a D&D schedule will be prepared for the invest- ment in Joan as of January 1, 2018. The following stockholders' equities are available: John Company December 31, Joan Company December 31, 2015 2016 2017 Common stock ($10 par).. Common stock ($10 par).. Paid-in capital in excess of par Retained eamings. $150,000 $100,000 $100,000 75,000 75,000 $300,000 80,000 50,000 $150,000 $180,000 Total equity On January 2, 2018, Joan Company sells a machine to Mary Company for $20,000. The machine has a book value of $10,000, with an estimated life of five years and is being depre- ciated on a straight-line basis. John Company sells $20,000 of merchandise to Joan Company during 2018 to realize a gross profit of 30%. Of this merchandise, $5,000 remains in Joan Company's December 31, 2018, inventory. Joan owes John $3,000 on December 31, 2018, for merchandise delivered during 2018. Trial balances of the three companies prepared from general ledger account balances on December 31, 2018, are as follows: Mary Company John Joan Company Company Cash Accounts Receivable. Inventory. Investment in John Company. Investment in Joan Company. Property, Plant, and Equipment. Accumulated Depreciation . 62,500 200,000 60,000 55,000 80,000 30,000 30,000 ..... 360,000 270,000 86,000 2,250,000 50,000 107,500 850,000 350,000 (121,800) (938,000) (377,500) (continued) Mary Company John Joan Company Company Intangibles... Accounts Payable Accrued Expenses. Bonds Payable... Common Stock ($5 par) Common Stock ($10 par) Common Stock ($10 par) Paid-In Capital in Excess of Par . Retained Earnings, January 1, 2018. Sales ... Gain on Sale of Equipment Subsidiary Income... Cost of Goods Sold 15,000 (215,500) (12,000) (500,000) (500,000) (61,000) (4,000) (300,000) (22,000) (1,200) (100,000) (150,000) (100,000) ... (700,000) (290,000) (1,800,000) (75,000) ... (130,000) (500,000) (80,000) (300,000) (10,000) (58,000) 1,170,000 525,000 (20,000) 350,000 100,000 180,000 90,000 Other Expenses, Dividends Declared.. Totals ... 75,000 15,000 5,000 Prepare the worksheet necessary to produce the consolidated financial statements of Mary Company and its subsidiaries as of December 31, 2018. Include the determination and distri- bution of excess and income distribution schedules. Any excess of cost is assumed to be attribu- table to goodwill. REQUIRED: 1. ALL DETERMINATION AND DISTRIBUTION SCHEDULES 2. INCOME DISTRIBUTION SCHEDULES 3. CONSOLIDATED WORKSHEET 4. ELIMINATION AND ADJUSTMENT The following diagram depicts the relationships among Mary Company, John Company, and Joan Company on December 31, 2018: Mary Owns 60% Owns 40% John Joan Owns 50% Mary Company purchases its interest in John Company on January 1, 2016, for $204,000. John Company purchases its interest in Joan Company on January 1, 2017, for $75,000. Mary Company purchases its interest in Joan Company on January 1, 2018, for $72,000. All invest- ments are accounted for under the equity method. Control over Joan Company does not occur until the January 1, 2018, acquisition. Thus, a D&D schedule will be prepared for the invest- ment in Joan as of January 1, 2018. The following stockholders' equities are available: John Company December 31, Joan Company December 31, 2015 2016 2017 Common stock ($10 par).. Common stock ($10 par).. Paid-in capital in excess of par Retained eamings. $150,000 $100,000 $100,000 75,000 75,000 $300,000 80,000 50,000 $150,000 $180,000 Total equity On January 2, 2018, Joan Company sells a machine to Mary Company for $20,000. The machine has a book value of $10,000, with an estimated life of five years and is being depre- ciated on a straight-line basis. John Company sells $20,000 of merchandise to Joan Company during 2018 to realize a gross profit of 30%. Of this merchandise, $5,000 remains in Joan Company's December 31, 2018, inventory. Joan owes John $3,000 on December 31, 2018, for merchandise delivered during 2018. Trial balances of the three companies prepared from general ledger account balances on December 31, 2018, are as follows: Mary Company John Joan Company Company Cash Accounts Receivable. Inventory. Investment in John Company. Investment in Joan Company. Property, Plant, and Equipment. Accumulated Depreciation . 62,500 200,000 60,000 55,000 80,000 30,000 30,000 ..... 360,000 270,000 86,000 2,250,000 50,000 107,500 850,000 350,000 (121,800) (938,000) (377,500) (continued) Mary Company John Joan Company Company Intangibles... Accounts Payable Accrued Expenses. Bonds Payable... Common Stock ($5 par) Common Stock ($10 par) Common Stock ($10 par) Paid-In Capital in Excess of Par . Retained Earnings, January 1, 2018. Sales ... Gain on Sale of Equipment Subsidiary Income... Cost of Goods Sold 15,000 (215,500) (12,000) (500,000) (500,000) (61,000) (4,000) (300,000) (22,000) (1,200) (100,000) (150,000) (100,000) ... (700,000) (290,000) (1,800,000) (75,000) ... (130,000) (500,000) (80,000) (300,000) (10,000) (58,000) 1,170,000 525,000 (20,000) 350,000 100,000 180,000 90,000 Other Expenses, Dividends Declared.. Totals ... 75,000 15,000 5,000 Prepare the worksheet necessary to produce the consolidated financial statements of Mary Company and its subsidiaries as of December 31, 2018. Include the determination and distri- bution of excess and income distribution schedules. Any excess of cost is assumed to be attribu- table to goodwill. REQUIRED: 1. ALL DETERMINATION AND DISTRIBUTION SCHEDULES 2. INCOME DISTRIBUTION SCHEDULES 3. CONSOLIDATED WORKSHEET 4. ELIMINATION AND ADJUSTMENT

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Marys investment in John on January 1 9000 shares Determination and Distribution of Excess Schedule ... View the full answer