Jarel Suarez $ (300,000) $(200,000) 80,000 10,000 Revenues... Cost of goods sold Expenses 140,000 20,000 Net income... $ (140,000) $(110,000) Retained earnings, 1/1. . Net income..... Dividends declared. $ (300,000) (140,000) -0- $(150,000) (110,000) -0- Retained earnings, 12/31 $ (440,000) $(260,000) $ 210,000 150,000 $ 90,000 110,000 Cash and receivables.. Inventory..... Investment in Suarez 260,000 440,000 -0- Equipment (net). 300,000 $ 1,060,000 $ (420,000) (200,000) (440,000) $(1,060,000) Total assets $ 500,000 $(140,000) (100,000) (260,000) $(500,000) Liabilities... Common stock Retained earnings, 12/31 Total liabilities and equities..

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Use the following data for Problems 10–15:
On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life.
As of December 31, the financial statements appeared as follows:
Included in the above statements, Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31.
What is the consolidated total for inventory at December 31?
a. $240,000
b. $248,000
c. $250,000
d. $260,000

Jarel
Suarez
$ (300,000)
$(200,000)
80,000
10,000
Revenues...
Cost of goods sold
Expenses
140,000
20,000
Net income...
$ (140,000)
$(110,000)
Retained earnings, 1/1. .
Net income.....
Dividends declared.
$ (300,000)
(140,000)
-0-
$(150,000)
(110,000)
-0-
Retained earnings, 12/31
$ (440,000)
$(260,000)
$ 210,000
150,000
$ 90,000
110,000
Cash and receivables..
Inventory.....
Investment in Suarez
260,000
440,000
-0-
Equipment (net).
300,000
$ 1,060,000
$ (420,000)
(200,000)
(440,000)
$(1,060,000)
Total assets
$ 500,000
$(140,000)
(100,000)
(260,000)
$(500,000)
Liabilities...
Common stock
Retained earnings, 12/31
Total liabilities and equities..
Transcribed Image Text:Jarel Suarez $ (300,000) $(200,000) 80,000 10,000 Revenues... Cost of goods sold Expenses 140,000 20,000 Net income... $ (140,000) $(110,000) Retained earnings, 1/1. . Net income..... Dividends declared. $ (300,000) (140,000) -0- $(150,000) (110,000) -0- Retained earnings, 12/31 $ (440,000) $(260,000) $ 210,000 150,000 $ 90,000 110,000 Cash and receivables.. Inventory..... Investment in Suarez 260,000 440,000 -0- Equipment (net). 300,000 $ 1,060,000 $ (420,000) (200,000) (440,000) $(1,060,000) Total assets $ 500,000 $(140,000) (100,000) (260,000) $(500,000) Liabilities... Common stock Retained earnings, 12/31 Total liabilities and equities..
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