On January 2, 2019, Moonshine, Inc. acquired Cambridge as a wholly-owned subsidiary, paying an excess of $400,000 over the book value of Hudson's net assets.  One-half of the excess was attributable to equipment with a 4-year life, leaving the remainder as goodwill. The parent uses the equity method of pre-consolidation Equity investment bookkeeping. The 2020 financial statements for the two companies are presented below.   Moonshine, Inc. Cambridge Sales $2,500,000 $600,000 Cost of goods sold -1,800,000 -350,000 Gross profit 700,000 250,000 Operating expenses -386,000 -82,000 Equity income 118,000 0 Net Income $432,000 $168,000       Retained Earnings, 1/1/20 $2,400,000 $160,000 Net income 432,000 168,000 Dividends -103,000 -19,500 Retained Earnings, 12/31/20 $2,729,000 $308,500       Cash and receivables $1,250,000 $47,500 Inventory 1,540,000 98,000 Equity investment 683,500 0 Property, plant & equipment (Net) 5,605,500 360,000 Total Assets $9,079,000 $505,500       Accounts payable $450,000 $39,000 Accrued liabilities 870,000 48,000 Notes payable 2,350,000 35,000 Common stock 480,000 30,000 Additional paid-in capital 2,200,000 45,000 Retained Earnings, 12/31/20 2,729,000 308,500 Total Liabilities and Equities $9,079,000 $505,500 Required:  At what amount will the following accounts appear on the consolidated financial statements for 2020? a. Sales b. Equity Income c. Operating Expenses

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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4-On January 2, 2019, Moonshine, Inc. acquired Cambridge as a wholly-owned subsidiary, paying an excess of $400,000 over the book value of Hudson's net assets.  One-half of the excess was attributable to equipment with a 4-year life, leaving the remainder as goodwill. The parent uses the equity method of pre-consolidation Equity investment bookkeeping. The 2020 financial statements for the two companies are presented below.

 

Moonshine, Inc.

Cambridge

Sales

$2,500,000

$600,000

Cost of goods sold

-1,800,000

-350,000

Gross profit

700,000

250,000

Operating expenses

-386,000

-82,000

Equity income

118,000

0

Net Income

$432,000

$168,000

 

 

 

Retained Earnings, 1/1/20

$2,400,000

$160,000

Net income

432,000

168,000

Dividends

-103,000

-19,500

Retained Earnings, 12/31/20

$2,729,000

$308,500

 

 

 

Cash and receivables

$1,250,000

$47,500

Inventory

1,540,000

98,000

Equity investment

683,500

0

Property, plant & equipment (Net)

5,605,500

360,000

Total Assets

$9,079,000

$505,500

 

 

 

Accounts payable

$450,000

$39,000

Accrued liabilities

870,000

48,000

Notes payable

2,350,000

35,000

Common stock

480,000

30,000

Additional paid-in capital

2,200,000

45,000

Retained Earnings, 12/31/20

2,729,000

308,500

Total Liabilities and Equities

$9,079,000

$505,500

Required:  At what amount will the following accounts appear on the consolidated financial statements for 2020?

a. Sales
b. Equity Income
c. Operating Expenses
d. Accounts Payable
e. Equity Investment
f. Property, Plant and Equipment (net of accumulated depreciation)
g. Goodwill
h. Additional Paid-In Capital
i. Retained Earnings

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