Please correct Solution with Explanation and do not give image format PConsolidated workpaper (downstream sales, intercompany receivable/ payable)Pal Corporation acquired a 90 percent interest in Sor Corporation on January 1, 2011, for $270,000, atwhich time Sor's capital stock and retained earnings were $150,000 and $90,000, respectively. The fairvalue/book value differential is goodwill. Financial statements for Pal and Sor for 2012 are as follows(in thousands):Combined Income and Retained Earnings Statementfor the Year Ended December 31, 2012SalesIncome from SorGain on landCost of salesOperating expensesNet incomeAdd: Retained earnings January 1Less: DividendsRetained earnings, December 31Balance Sheet at December 31, 2012CashAccounts receivableDividends receivableInventoriesLandBuildings-netMachinery-netInvestment in SorAccounts payableDividends payableOther liabilitiesCapital stockRetained earningsPal$ 450405(200)(113)182202(150)$ 234$ 13318018- 60100280330303$1,404$ 20030140800234$1,404Sor$190(100)(40)50120-(20)$150$14100363080140$400$502030150150$400ADDITIONAL INFORMATION1. Pal sold inventory items to Sor for $60,000 during 2011 and $72,000 during 2012. Sor's inventories atDecember 31, 2011 and 2012, included unrealized profits of $10,000 and $12,000, respectively.2. On July 1, 2011, Pal sold machinery with a book value of $28,000 to Sor for $35,000. The machinery had -The gain won'ta useful life of 3.5 years at the time of sale, and straight-line depreciation is used.3. During 2012, Pal sold land with a book value of $15,000 to Sor for $20,000.4. Pal's accounts receivable on December 31, 2012, includes $10,000 due from Sor.5. Pal uses the equity method for its 90% interest in Sor.1/2 yr of deprec. cffect inc frombut will fou(-7 +1) 26Gün Ecos DE

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Consolidated workpaper Pal Corporation acquired a 90 percent interest in Sor Corporation on January 1, 2011, for $270,000, at which time Sor's capital stock and retained earnings were $150,000 and $90,000, respectively. The fair value/book value differential is goodwill. Financial statements for Pal and Sor for 2012 are as follows (in thousands): Combined Income and Retained Earnings Statement for the Year Ended December 31, 2012 Sales Income from Sor Gain on land Cost of sales Operating expenses Net income Pal $ 450 40 5 (200) (113) 182 Sor $190 (100) (40) 50

Consolidated workpaper Pal Corporation acquired a 90 percent interest in Sor Corporation on January 1, 2011, for $270,000, at which time Sor's capital stock and retained earnings were $150,000 and $90,000, respectively. The fair value/book value differential is goodwill. Financial statements for Pal and Sor for 2012 are as follows (in thousands): Combined Income and Retained Earnings Statement for the Year Ended December 31, 2012 Sales Income from Sor Gain on land Cost of sales Operating expenses Net income Pal $ 450 40 5 (200) (113) 182 Sor $190 (100) (40) 50

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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