$15,000 Less: Expenses
The financial statements of Plax Inc. and Slate Corp for the year ended December 31, 2020 are shown below:
Income Statements
|
|
Plax Inc. |
Slate Corp |
|
Miscellaneous Revenues |
$1,300,000 |
$400,000 |
|
Interest Revenues |
$11,250 |
|
|
Dividend Revenue |
$15,000 |
|
|
Less: Expenses |
|
|
|
Miscellaneous Expense |
$864,000 |
$259,200 |
|
Interest Expense |
|
$19,400 |
|
Income Tax Expense |
$198,000 |
$48,000 |
|
Net Income |
$264,250 |
$73,400 |
|
|
Plax Inc. |
Slate Corp |
|
Balance, January 1, 2020 |
$490,000 |
$180,000 |
|
Net Income |
$264,250 |
$73,400 |
|
Less: Dividends |
$(126,000) |
($20,000) |
|
Retained Earnings |
$628,250 |
$233,400 |
Balance Sheets
|
|
Plax Inc. |
Slate Corp |
|
Miscellaneous Assets |
$1,210,000 |
$745,200 |
|
Investment in Slate Shares |
$196,000 |
|
|
Investment in Slate Bonds |
$122,250 |
|
|
Total Assets |
$1,528,250 |
$745,200 |
|
Miscellaneous Liabilities |
$600,000 |
$150,000 |
|
Bonds Payable |
|
$200,000 |
|
Bond Premium |
|
$1,800 |
|
Common Shares |
$300,000 |
$160,000 |
|
Retained Earnings |
$628,250 |
$233,400 |
|
Total Liabilities and Equity |
$1,528,250 |
$745,200 |
Other Information:
• Plax acquired 75% of Slate on January 1, 2016 for $196,000, when Slate's retained earnings was $80,000 and the acquisition differential was attributable entirely to
• Plax uses the cost method to account for its investment.
• Slate has 10% par
• On January 1, 2020, Plax acquired $120,000 face value of Slate's bonds for $123,000 Plax also uses the straight line method to amortize any bond premium or discount.
• Both companies are subject to a 40% tax rate.
• Gains and losses from intercompany bond holdings are to be allocated to the two companies when consolidated financial statements are prepared.
Prepare a Statement of Consolidated Retained Earnings for the year ended December 31, 2020 for Plax Inc.
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