PLEASE ONLY

DO PART C

$6-1$ The working paper elimination for Pakistan Corporation and subsidiary on March $31.$ Year $7.$ the date of the purchase$-$type business combination, was as follows:

$($a$)$ Common Stock. $51$ par$-$Sikkim $............\mathrm{.}50,000$

Paid$-$in Capital in Excess of Par$-$Sikkim $.........100,000$

Retained Earnings$-$Sikkim $.................150,000$

Inventories$-$Sikkim $($fifo cost$)...............20\mathrm{.}000$

Land$-$Sikkim $.........................50,000$

Other Plant Assets$-$Sikkim $($economic life $10$ years$)..80,000$

Goodwill$-$Sikkim $.......40,000$

Investment in Sikkim Company Common Stock$-$

Pakistan $......................$

$490\mathrm{.}000$

To eliminate intercompany investment and equity accounts of subsidiary on date of business combination; and to allocate excess of cost over carrying amounts of identifiable assets acquired, with remainder to goodwill. $($Income tax effects are disregarded.$)$

For the fiscal year ended March $31.$ Year $8.$ Sikkim Comoany reported net income of $$60\mathrm{.}000.$ Sikkim declared a cash dividend of $$0\mathrm{.}40$ a share on March $1,$ Year $8.$ and paid the dividend on Marcn $15.$ Year $8.($Sikkim had not declared or paid dividends during the year ended Marcn $31,$ Year $7.)$ Sikkim uses the straight$-$line method for depreciation expense and amortization expense. both of which are included in operating expenses.

Instructions

a Prepare journal entries in the accounting records of Pakistan Corporation to record the operating results of Sikkim Company for the year ended March $31.$ Year $8.$ under the equity method of accounting. Disregard income taxes.

b Prepare three$-$column ledger accounts for Pakistan Corporation's Investment in Sikkim Company Common Stock and Intercompany Investment Income ac$-$counts, and post the journal entries in a$.$

c Prepare a working paper elimination for Pakistan Corporation and subsidiary on March $31,$ Year $8,$ in journal entry form. Disregard income taxes.

WORKPAPER FOR PROBLEM $6-1$

INCOME STATEMENT

$\backslash$table$[[$Revenue:$,$P$,$S$],[\backslash$table$[[$Sales$],[$Interco Investm Income$]],1,000,000,600,{000}_{?}6-1$ The working paper elimination for Pakistan Corporation and subsidiary on March $31.$ Year $7,$ the date of the purchase$-$type business combination, was as follows:

$($a$)$ Common Stock. $51$ par$-$Sikkim $............\mathrm{.}50,000$

Paid$-$in Capital in Excess of Par$-$Sikkim $.........100,000$

Retained Earnings$-$Sikkim $.................150,000$

Inventories$-$Sikkim $($fifo cost$)...............20\mathrm{.}000$

Land$-$Sikkim $.........................50,000$

Other Plant Assets$-$Sikkim $($economic life $10$ years$)..,80,000$

Goodwill$-$Sikkim $.......40,000$

Investment in Sikkim Company Common Stock$-$

Pakistan $......................$

$490\mathrm{.}000$

To eliminate intercompany investment and equity accounts of subsidiary on date of business combination; and to allocate excess of cost over carrying amounts of identifiable assets acquired, with remainder to goodwill. $($Income tax effects are disregarded.$)$

For the fiscal year ended March $31.$ Year $8.$ Sikkim Comoany reported net income of $$60\mathrm{.}000.$ Sikkim declared a cash dividend of $$0\mathrm{.}40$ a share on March $1,$ Year $8.$ and paid the dividend on Marcn $15.$ Year $8.($Sikkim had not declared or paid dividends during the year ended Marcn $31,$ Year $7.)$ Sikkim uses the straight$-$line method for depreciation expense and amortization expense. both of which are included in operating expenses.

Instructions

a Prepare journal entries in the accounting records of Pakistan Corporation to record the operating results of Sikkim Company for the year ended March $31.$ Year $8.$ under the equity method of accounting. Disregard income taxes.

b Prepare three$-$column ledger accounts for Pakistan Corporation's Investment in Sikkim Company Common Stock and Intercompany Investment Income ac$-$counts, and post the journal entries in

WORKPAPER FOR PROBLEM $6-1$

INCOME STATEMENT

RETAINED EARNINGS STATEMENT

Beginning Retained Earnings

Net Income

Dividends

Ending Retained Earnings

c Prepare a working paper $$limination for Pakistan Corporation and subsidiary on March $31,$ Year $8,$ in journal entry form. Disregard income taxes.