Prepare all necessary journal entries in the consolidated workpapers on 12/31/x8. 

1. Eliminate income from Sub

2. Create NCI share

3. Eliminate BOY balances

4. Assign 1/1/X8 unamortized differences

5. & 6. Record amortization

7. - 9. Eliminate intercompany transactions for the below information:

Pace Corporation paid $400,000 for an 80% interest in Stew Corporation on January 1, 20X6 when the stockholders' equity of Stew consisted of $200,000 capital stock and $120,000 retained earnings. The following assets of Stew had fair values different from their book values when Pace acquired its interest:

	Book Value		Fair Value
Inventories (sold in 20X6)	$ 50,000		$ 30,000
Equipment (8-year life at the time of combination) Bonds Payable (matures 5 yrs after acquisition)	600,000 (500,000)		664,000 (525,000)

Additional information:

Stew’s accounts payable on December 31, 20X8 included $10,000 owed to Pace.

The pace and Stew's financial statements for the year ended 12/31X8 are provided below:

Pace Corporation and Subsidiary Consolidation Working Papers
For the year ended December 31, 20x8
	Pace	Stew	Adjustments & Eliminations (In 000's)				Consolidated
	(In 000’s)	(In 000’s)					(In 000's)
Income Statement				DR.		CR.
Sales	$882.0	$300.0
Income from Stew	37.6
Cost of sales	(600.0)	(150.0)
Operating expenses	(150.0)	(75.0)
Interest expense	(30.0)	(25.0)
Consolidated net income (CNI)	139.6	50.0
Controlling share of CNI	$139.6	$50.0
Retained Earnings
Retained earnings-Pace 1/1/X8	$105.0
Retained earnings-Stew 1/1/X8		$160.0
Net income	139.6	50.0
Dividends	(100.0)	(20.0)
Retained earnings-12/31/X8	$144.6	$190.0
Balance Sheet
Cash	$89.8	$15.0
Accounts receivable	72.0	20.0
Inventories	100.0	60.0
Loan receivable from Stew	50.0
Land	160.0	85.0
Equipment-net	240.0	730.0
Dividends receivable	8.0
Investment in Stew	464.8
Totals	$1,184.6	$910.0
Accounts payable	$100.0	$60.0
Dividends payable	70.0	10.0
Bonds payable	170.0	400.0
Loan payable to Pace		50.0
Capital stock	700.0	200.0
Retained earnings	144.6	190.0
Totals	$1,184.6	$910.0

Answer rating: 100% (QA)

Income Statement Sales Income from Stew Cost of sales Operating expens... View the full answer