On January 1, 20X1, Pinto Company purchased an 80% interest in Sands Inc. for $1,000,000. The equity balances of Sands at the time of the purchase were as follows: Common stock ($10 par) $100,000 Paid-in capital in excess of par 400,000 Retained earnings 500,000 Any excess of cost over book value is attributable to goodwill. No dividends were paid by either firm during 20X6. The following trial balances were prepared for Pinto Company and its subsidiary, Sands Inc., on December 31, 20X6: Pinto Sands Cash 120,000 70,000 Accounts receivable 240,000 197,000 Inventory 200,000 176,000 Land 600,000 180,000 Buildings and equipment 1,100,000 800,000 Accumulated depreciation (180,000) (120,000) Investment in Sands 1,000,000 Accounts payable (110,000) (50,000) Common stock, $10 par (800,000) (100,000) Paid-in capital in excess of par (660,000) (400,000) Retained earnings (1,340,000) (650,000) Sales (600,000) (300,000) Other income (40,000) (15,000) Cost of goods sold 320,000 180,000 Other expenses 150,000 32,000 Total - - Sands sold a machine to Pinto Company for $40,000 on January 1, 20X6. The machine cost Sands $50,000, and $25,000 of accumulated depreciation had been recorded as of the sale date. The machine had a 5-year remaining life and no salvage value. Pinto Company is using straight-line depreciation. Since the purchase date, Pinto has sold merchandise for resale to Sands, Inc. at a mark-up on cost of 25%. Sales during 20X6 were $150,000. The inventory of these goods held by Sands was $15,000 on January 1, 20X6, and $18,000 on December 31, 20X6. Required: Prepare a consolidated income statement for 20X6, including income distribution schedules to support your distribution of income to the noncontrolling and controlling interest interests. Check figure: Net Income $260,400.
On January 1, 20X1, Pinto Company purchased an 80% interest in Sands Inc. for $1,000,000. The equity balances of Sands at the time of the purchase were as follows:
|
Common stock ($10 par) |
$100,000 |
|
Paid-in capital in excess of par |
400,000 |
|
|
500,000 |
Any excess of cost over book value is attributable to
No dividends were paid by either firm during 20X6. The following
|
|
Pinto |
Sands |
|
Cash |
120,000 |
70,000 |
|
|
240,000 |
197,000 |
|
Inventory |
200,000 |
176,000 |
|
Land |
600,000 |
180,000 |
|
Buildings and equipment |
1,100,000 |
800,000 |
|
|
(180,000) |
(120,000) |
|
Investment in Sands |
1,000,000 |
|
|
Accounts payable |
(110,000) |
(50,000) |
|
Common stock, $10 par |
(800,000) |
(100,000) |
|
Paid-in capital in excess of par |
(660,000) |
(400,000) |
|
Retained earnings |
(1,340,000) |
(650,000) |
|
Sales |
(600,000) |
(300,000) |
|
Other income |
(40,000) |
(15,000) |
|
Cost of goods sold |
320,000 |
180,000 |
|
Other expenses |
150,000 |
32,000 |
|
Total |
- |
- |
Sands sold a machine to Pinto Company for $40,000 on January 1, 20X6. The machine cost Sands $50,000, and $25,000 of accumulated depreciation had been recorded as of the sale date. The machine had a 5-year remaining life and no salvage value. Pinto Company is using straight-line depreciation.
Since the purchase date, Pinto has sold merchandise for resale to Sands, Inc. at a mark-up on cost of 25%. Sales during 20X6 were $150,000. The inventory of these goods held by Sands was $15,000 on January 1, 20X6, and $18,000 on December 31, 20X6.
Required:
Prepare a consolidated income statement for 20X6, including income distribution schedules to support your distribution of income to the noncontrolling and controlling interest interests. Check figure: Net Income $260,400.
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