Polka Corporation acquired 100 percent of Song Company's voting stock on January 1, 20X4, at underlying book value. Polka uses the equity method in accounting for its ownership of Song. On December 31, 20X4, the trial balances of the two companies are as follows:

		Polka Corporation								Song Company
Item		Debit				Credit				Debit				Credit
Current Assets		$	242,000							$	151,000
Depreciable Assets			510,000								320,000
Investment in Song Company			251,000
Depreciation Expense			23,000								13,000
Other Expenses			151,000								84,000
Dividends Declared			57,000								28,000
Accumulated Depreciation						$	199,000							$	78,000
Current Liabilities							54,000								34,000
Long-Term Debt							88,000								108,000
Common Stock							180,000								90,000
Retained Earnings							455,000								141,000
Sales							210,000								145,000
Income from Song Company							48,000
		$	1,234,000			$	1,234,000			$	596,000			$	596,000

Required:

a. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. Prepare a three-part consolidation worksheet as of December 31, 20X4. (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.)

Answer rating: 100% (QA)

Answer Solutiona Date Account Title and Explanation Debit Credit Dec 31 20X4 Common Stock Retained E... View the full answer