Assets Liabilities and Equity $180,000 Liabilities . $100,000 200,000 Current assets Long-lived assets (net) 320,000 Common stock.. Paid-in capital in excess of par .... Retained earnings . 100,000 100,000 Total assets.... $500,000 Totalliabilities and equity $500,000
On April 1, 2015, Benton Corporation purchased 80% of the outstanding stock of Crandel Company for $425,000. A condensed balance sheet of Crandel Company at the purchase date is shown below.
All book values approximated fair values on the purchase date. Any excess cost was attributed to
The following information was gathered pertaining to the first two years of operation since Benton’s purchase of Crandel Company stock:
a. Intercompany merchandise sales were summarized as follows:
| Date | Transaction | Sales | Gross Profit | Merchandise Remaining in Purchaser’s Ending Inventory |
|
April 1, 2015 to March 31, 2016 April 1, 2016 toMarch 31, 2017 |
Benton to Crandel Crandel to Benton
Benton to Crandel Crandel toBenton |
$40,000 20,000
32,000 30,000 |
20% 25
20 25 |
$9,000 4,000
6,000 3,000 |
b. On March 31, 2017, Benton owed Crandel $10,000, and Crandel owed Benton $5,000 as a result of the intercompany sales.
c. Benton paid $25,000 in cash dividends on March 20, 2016 and 2017. Crandel paid its first cash dividend on March 10, 2017, giving each share of outstanding common stock a $0.15 cash dividend.
d. The
Benton Corporation Crandel Company
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191,200 44,300
Accounts Receivable (net) . . . . . . . . . . . 290,000 97,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 310,000 80,000
Investment in Crandel Company . . . . 450,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,081,000 150,000
Building and Equipment . . . . . . . . . . . 1,850,000 400,000
Accumulated Depreciation . . . . . . . .. (940,000) (210,000)
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Accounts Payable . . . . . . . . . . . . . . . . . . (242,200) (106,300)
Bonds Payable. . . . . . . . . . . . . . . . . . . . . . (400,000)
Common Stock ($0.50 par). . . . . . . . . . (250,000)
Common Stock ($1 par) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (200,000)
Paid-In Capital in Excess of Par . . . . . (1,250,000) (100,000)
Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(880,000) (630,000)
Dividend Income (from Crandel Company) (24,000)
Cost of Goods Sold . . . . . . . . . . . . . . . . . . 704,000 504,000
Other Expenses. . . . . . . . . . . . . . . . . . . . . . 130,000 81,000
Dividends Declared . . . . . . . . . . . . . . . . . . .25,000 30,000
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0 0
1. Prepare the worksheet necessary to produce the consolidated financial statements of Benton Corporation and its subsidiary for the year ended March 31, 2017. Include the value analysis and a determination and distribution of excess schedule and the income distribution schedules.
2. Prepare the formal consolidated income statement for the fiscal year endingMarch 31, 2017.
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