P8-20A Balance Sheet Consolidations (Straight-Line Method) LO 8-40 Advanced Study Guide .com Pea Corporation acquired 80 percent of Split Company's stock on January 1, 20X1, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of Split's book value. On January 1, 20X1, Split issued $300,000 par value, 8 percent, 10-year bonds to Malt Company, Pea subsequently purchased $100,000 of the bonds from Malt for $112,000 on January 1, 20X3. Interest is paid semiannually on January 1 and July 1. Assume Pea Corporation uses the fully adjusted equity method. Summarized balance sheets for Pea and Split as of December 31, 20X4, follow: Cash & Receivables Inventory Buildings & Equipment (net) Investment in Split Company: Bonds Stock Total Assets PEA CORPORATION Balance Sheet December 31, 20X4 $122.500 Accounts Payable 200,000 Bonds Payable 320,000 Common Stock Retained Earnings 101,500 207,600 $951,600 Total Liabilities & Owners' Equity $ 40,000 400,000 200,000 311,600 $951,600 Cash & Receivables Inventory Buildings & Equipment (net) SPLIT COMPANY Balance Sheet December 31, 20X4 $124.000 Accounts Payable 150,000 Bonds Payable 360,000 Bond Premium Common Stock Retained Earnings $634,000 Total Liabilities & Owners' Equity $ 28,000 300,000 36,000 100,000 170,000 $634,000 Total Assets At December 31, 20X4, Split holds $42,000 of inventory purchased from Pea, and Pea holds $26,000 of inventory purchased from Split. Split and Pea sell at cost plus markups of 30 percent and 40 percent, respectively. Assume total sales from Pea to Split were $100,000 and from Split to Pea were $50,000. Page 436 Required a. Prepare all consolidation entries needed on December 31, 20X4, to complete a consolidated balance sheet worksheet. Assume Split earned $75,000 and paid $10,000 in dividends during the year. b. Prepare a consolidated balance sheet worksheet. c. Prepare a consolidated balance sheet in good form. P8-20A Balance Sheet Consolidations (Straight-Line Method) LO 8-40 Advanced Study Guide .com Pea Corporation acquired 80 percent of Split Company's stock on January 1, 20X1, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of Split's book value. On January 1, 20X1, Split issued $300,000 par value, 8 percent, 10-year bonds to Malt Company, Pea subsequently purchased $100,000 of the bonds from Malt for $112,000 on January 1, 20X3. Interest is paid semiannually on January 1 and July 1. Assume Pea Corporation uses the fully adjusted equity method. Summarized balance sheets for Pea and Split as of December 31, 20X4, follow: Cash & Receivables Inventory Buildings & Equipment (net) Investment in Split Company: Bonds Stock Total Assets PEA CORPORATION Balance Sheet December 31, 20X4 $122.500 Accounts Payable 200,000 Bonds Payable 320,000 Common Stock Retained Earnings 101,500 207,600 $951,600 Total Liabilities & Owners' Equity $ 40,000 400,000 200,000 311,600 $951,600 Cash & Receivables Inventory Buildings & Equipment (net) SPLIT COMPANY Balance Sheet December 31, 20X4 $124.000 Accounts Payable 150,000 Bonds Payable 360,000 Bond Premium Common Stock Retained Earnings $634,000 Total Liabilities & Owners' Equity $ 28,000 300,000 36,000 100,000 170,000 $634,000 Total Assets At December 31, 20X4, Split holds $42,000 of inventory purchased from Pea, and Pea holds $26,000 of inventory purchased from Split. Split and Pea sell at cost plus markups of 30 percent and 40 percent, respectively. Assume total sales from Pea to Split were $100,000 and from Split to Pea were $50,000. Page 436 Required a. Prepare all consolidation entries needed on December 31, 20X4, to complete a consolidated balance sheet worksheet. Assume Split earned $75,000 and paid $10,000 in dividends during the year. b. Prepare a consolidated balance sheet worksheet. c. Prepare a consolidated balance sheet in good form