Penn Corporation purchased 80 percent ownership of State Company on January 1, 20X2, at underlying book...

Transcribed Image Text:

Penn Corporation purchased 80 percent ownership of State Company on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling Interest was equal to 20 percent of the book value of State. On January 1, 20X4, Penn sold 2.000 shares of State's stock for $70,000 to Nonaffiliated Company and recorded a $18,000 Increase in additional paid-in capital. Trial balances for the companies on December 31, 20X4, contain the following data: Cash Accounts Receivable Inventory Buildings and Equipment Investment in State Company Cost of Goods Sold Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock ($10 par) Additional Paid-In Capital Retained Earnings Sales Income from State Total Penn Corporation Debit Credit $ 36,000 State Company Debit $ 41,000 Credit 78,000 58,000 127,000 107,000 650,000 250,000 178,800 206,000 96,000 20,000 15,000 30,000 34,000 19,000 14,000 $ 169,000 160,600 $ 94,000 37,000 165,000 200,000 27,000 100,000 68,000 20,000 290,000 160,000 273,000 177,000 19,200 $ 1,344,800 $ 1,344,800 $ 615,000 $ 615,000 State's net income was earned evenly throughout the year. Both companies declared and paid their dividends on December 31, 20X4. Penn uses the equity method in accounting for its Investment In State. Required: a. Prepare the consolidation entries needed to complete a worksheet for 20X4. b. Prepare a consolidation worksheet for 20X4. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the consolidation entries needed to complete a worksheet for 20X4. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list View journal entry worksheet No Event Accounts A 1 Common stock Additional paid-in capital Retained earnings Income from State Company NCI in NI of State Company Dividends declared Investment in State Company NCI in NA of State Company < Required A Required B > Debit Credit Complete this question by entering your answers in the tabs below. Required A Required B Prepare a consolidation worksheet for 20X4. Note: Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Show less A Income Statement Sales Less: Cost of goods sold Less: Depreciation Expense Less: Other Expenses Income from State Company PENN CORPORATION AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X4 Consolidation Entries State Debit Credit Consolidated Penn Corporation Company Consolidated Net Income 0 0 0 0 0 NCI in Net Income Controlling Interest in NI 0 0 0 0 0 Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance 0 Balance Sheet Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Investment in State Company Total Assets Accounts Payable Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings NCI in NA of State Company Total Liabilities and Equity 0 0 0 0 0 0 Penn Corporation purchased 80 percent ownership of State Company on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling Interest was equal to 20 percent of the book value of State. On January 1, 20X4, Penn sold 2.000 shares of State's stock for $70,000 to Nonaffiliated Company and recorded a $18,000 Increase in additional paid-in capital. Trial balances for the companies on December 31, 20X4, contain the following data: Cash Accounts Receivable Inventory Buildings and Equipment Investment in State Company Cost of Goods Sold Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock ($10 par) Additional Paid-In Capital Retained Earnings Sales Income from State Total Penn Corporation Debit Credit $ 36,000 State Company Debit $ 41,000 Credit 78,000 58,000 127,000 107,000 650,000 250,000 178,800 206,000 96,000 20,000 15,000 30,000 34,000 19,000 14,000 $ 169,000 160,600 $ 94,000 37,000 165,000 200,000 27,000 100,000 68,000 20,000 290,000 160,000 273,000 177,000 19,200 $ 1,344,800 $ 1,344,800 $ 615,000 $ 615,000 State's net income was earned evenly throughout the year. Both companies declared and paid their dividends on December 31, 20X4. Penn uses the equity method in accounting for its Investment In State. Required: a. Prepare the consolidation entries needed to complete a worksheet for 20X4. b. Prepare a consolidation worksheet for 20X4. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the consolidation entries needed to complete a worksheet for 20X4. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list View journal entry worksheet No Event Accounts A 1 Common stock Additional paid-in capital Retained earnings Income from State Company NCI in NI of State Company Dividends declared Investment in State Company NCI in NA of State Company < Required A Required B > Debit Credit Complete this question by entering your answers in the tabs below. Required A Required B Prepare a consolidation worksheet for 20X4. Note: Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Show less A Income Statement Sales Less: Cost of goods sold Less: Depreciation Expense Less: Other Expenses Income from State Company PENN CORPORATION AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X4 Consolidation Entries State Debit Credit Consolidated Penn Corporation Company Consolidated Net Income 0 0 0 0 0 NCI in Net Income Controlling Interest in NI 0 0 0 0 0 Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance 0 Balance Sheet Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Investment in State Company Total Assets Accounts Payable Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings NCI in NA of State Company Total Liabilities and Equity 0 0 0 0 0 0