Prepare a workpaper for a consolidated balance sheet for

Pumpkin

Company and its subsidiary on January 1, 2017, taking into consideration the following:

1.

Pumpkin

Company acquired 90% of the outstanding common stock of

Spice Company

on January 1, 2017, for a cash payment of $1,378,000.

2.

Unrelated to the acquisition, Pumpkin Company agreed to pay$150,000 in cash advances to Spice Company

.

These cash advances were

to be made in three installment payments of $50,000 each. Pumpkin mailed the final $50,000 payment on January 1, 2017 Spice Company had not yet received this final portion of the advance at the time of the preparation of its January 1, 2017 balance sheet.

3.Pumpkin Company holds 40,000 of notes receivable from Spice Company

.

4. On the date of acquisition,Pumpkin's management noted the following fair value measurements of Spice's accounts: accounts receivable of $300,000, inventory of$240,000, plant and equipment of $600,000, and accrued expenses of $46,000. The remainder Spice's assets and liabilities had fair values that were equal to their book values

Balance sheets for Pumpkin Company and Spice Company on

January 1, 2017, are as follows:Pumpkin Spice

Cash $331,000 $212,000

Accounts receivable 582,000 252,000

Due from subsidiary 150,000 0

Inventory 522,000 216,000

Notes receivable 612,000 0

Investment in S 1,378,000 0

Plant and equipment (net)1,146,000 640,000

Land 400,000 600,000

Total Assets$ 5,121,000 $ 1,920,000

Accounts payable$ 348,000 $ 116,000

Accrued expenses 65,000 52,000

Due to parent- 0 100,000

Notes payable- 0 300,000

Common stock 3,205,000 920,000

Other contributed capital 520,000 120,000

Retained earnings 983,000 312,000

Total Liabilities and Equities$5,121,000 $ 1,920,000

Parent is on the left Subsidiary in on the right