B1-53 Preparing a consolidated income statementObj. 4For the year ended December 31, 20Y2, the operating results of Paley Corporation and its whollyowned subsidiary, Sims Enterprises, are as follows:1A2345 Operating expenses6Operating income7Interest revenue8 Interest expense9Net incomeSalesCost of goods soldGross profitFPaleyCorporation3,200,000(1,900,000)1,300,000(750,000)550,00020,000570,000SimsEnterprises900,000(550,000)350,000(125,000)225,000(15,000)210,000During 20Y2, Sims Enterprises sold and received payment of $80,000 for merchandise that waspurchased by Paley Corporation. The merchandise sold to Paley cost Sims Enterprises $45,000.Paley Corporation sold the merchandise to another (nonaffiliated) company for $110,000.a. Prepare a consolidated income statement for Paley Corporation and Subsidiary. Hint: Eliminatethe effect of the intercompany sale.Assume that as of December 31, 20Y2, Paley Corporation had not sold the merchan-dise purchased from Sims Enterprises. How would this affect the preparation of the consoli-dated financial statements?Assume that $15,000 of the interest revenue that Paley Corporation reported on itsincome statement was from a note payable from Sims Enterprises. Sims paid the note payableat its maturity in 20Y2. How would the loan affect the preparation of the consolidated financialstatements?

Financial statements that jointly aggregate a parent business and its subsidiaries are known as…

8153 Preparing a consolidated income statement Obj. 4 For the year ended December 31, 2012, the operating results of Paley Corporation and its wholly owned slidiary, Sims Enterprises, are as follow expense Puy Corporation 1.300.00 1.300.000 550.000 54500 150.000 01.25.000 225.000 15.000 During 2012, Si Enterprises sold and received payment of $80,000 for merchandise that was purchased by Paley Corporation. The merchandise sold to Paley cost Sims Enterprises $45,000 Paley Corporation sold the mechandise to another (nonaffidated) company for $110.000 Prepare a constated income statement for Paley Corporation and Solidary. Hist the effect of the intercompany sale Assume that as of December 31, 2012, Paley Corporation had not sold the merchan dine purchased from Sins Enterprises. How would this affect the preparation of the consoli dated financial stat Asume that $15,000 of the interest revenue that Paley Corporation reported on its statement was from a note payable from Sims Enterprises Sans paid the note payable

8153 Preparing a consolidated income statement Obj. 4 For the year ended December 31, 2012, the operating results of Paley Corporation and its wholly owned slidiary, Sims Enterprises, are as follow expense Puy Corporation 1.300.00 1.300.000 550.000 54500 150.000 01.25.000 225.000 15.000 During 2012, Si Enterprises sold and received payment of $80,000 for merchandise that was purchased by Paley Corporation. The merchandise sold to Paley cost Sims Enterprises $45,000 Paley Corporation sold the mechandise to another (nonaffidated) company for $110.000 Prepare a constated income statement for Paley Corporation and Solidary. Hist the effect of the intercompany sale Assume that as of December 31, 2012, Paley Corporation had not sold the merchan dine purchased from Sins Enterprises. How would this affect the preparation of the consoli dated financial stat Asume that $15,000 of the interest revenue that Paley Corporation reported on its statement was from a note payable from Sims Enterprises Sans paid the note payable

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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