On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company for P350,000. The financial statements of Parent and Subsidiary Company before the acquisition follow: Subsidiary Parent Company Company Value 100,000 100,000 50,000 Parent Cash 700,000 300,000 1,000,000 500,000 1,000,000 500,000 Inventory 55,000 350,000 365,000 200,000 200,000 200,000 100,000 PPE Liabilities Outstanding Shares Retained eamings Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow: AdditionalInfomation: The undervahued PPE of Subsidiary on the date of acquisition has a remaining useful life of 5-years. Subsidiary Company owes Parent Company P5,000 on December 31, 2x19.

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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Prepare the related eliminating entries on January 1, 20x9 and December 31, 20x19

CONSOLIDATED BALANCE SHEET
JANUARY 1, 20X9
BALANCE SHEET
Cash
Receivables
300,000
100,000
650,000
350,000
900,000
125,000
30,000
45,000
Inventory
Investment in Subsidiary
PPE
350,000
Total
2,300,000
550,000
Liabilities
Outstanding shares
Retained earnings
600,000
1,000,000
700,000
150,000
200,000
200,000
Total
2,300,000
550,000
CONSOLIDATED WORKSHEET
DECEMBER 31, 20X9
INCOME
AND
RETAINED
Parent
Subsidiary
Company
550,000
EARNINGS
Debits
Credits
Company
800,000
40,000
(480,000)
Sales
Dividend income
Cost of sales
(250,000)
(150,000)
150,000
Operating expenses
(60,000)
300,000
Net income
Retained earnings, Jan 1, 20x19
500,000
(100,000)
700,000
100,000
(50,000)
200,000
Dividends declared
Retained earnings end
BALANCE SHEET
Cash
300,000
100,000
650,000
350,000
900,000
125,000
30,000
45,000
Receivables
Inventory
Investment in Subsidiary
PPE
350,000
Total
2,300,000
550,000
600,000
1,000,000
700,000
Liabilities
150,000
200,000
Outstanding shares
Retained earnings
200,000
Total
2,300,000
550,000
Transcribed Image Text:CONSOLIDATED BALANCE SHEET JANUARY 1, 20X9 BALANCE SHEET Cash Receivables 300,000 100,000 650,000 350,000 900,000 125,000 30,000 45,000 Inventory Investment in Subsidiary PPE 350,000 Total 2,300,000 550,000 Liabilities Outstanding shares Retained earnings 600,000 1,000,000 700,000 150,000 200,000 200,000 Total 2,300,000 550,000 CONSOLIDATED WORKSHEET DECEMBER 31, 20X9 INCOME AND RETAINED Parent Subsidiary Company 550,000 EARNINGS Debits Credits Company 800,000 40,000 (480,000) Sales Dividend income Cost of sales (250,000) (150,000) 150,000 Operating expenses (60,000) 300,000 Net income Retained earnings, Jan 1, 20x19 500,000 (100,000) 700,000 100,000 (50,000) 200,000 Dividends declared Retained earnings end BALANCE SHEET Cash 300,000 100,000 650,000 350,000 900,000 125,000 30,000 45,000 Receivables Inventory Investment in Subsidiary PPE 350,000 Total 2,300,000 550,000 600,000 1,000,000 700,000 Liabilities 150,000 200,000 Outstanding shares Retained earnings 200,000 Total 2,300,000 550,000
On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company for P350,000. The
financial statements of Parent and Subsidiary Company before the acquisition follow:
Parent
Subsidiary Parent
Company Company Value
700,000
300,000
1,000,000
500,000
1,000,000
500,000
Cash
Inventory
PPE
100,000 100,000
50,000
55,000
350,000 365,000
200,000 200,000
200,000
100,000
Liabilities
Outstanding Shares
Retained eamings
|Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow:
AdditionalInfomation:
The undervalued PPE of Subsidiary on the date of acquisition has a remaining useful life of 5-years.
Subsidiary Company owes Parent Company P5,000 on December 31, 2x19.
Transcribed Image Text:On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company for P350,000. The financial statements of Parent and Subsidiary Company before the acquisition follow: Parent Subsidiary Parent Company Company Value 700,000 300,000 1,000,000 500,000 1,000,000 500,000 Cash Inventory PPE 100,000 100,000 50,000 55,000 350,000 365,000 200,000 200,000 200,000 100,000 Liabilities Outstanding Shares Retained eamings |Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow: AdditionalInfomation: The undervalued PPE of Subsidiary on the date of acquisition has a remaining useful life of 5-years. Subsidiary Company owes Parent Company P5,000 on December 31, 2x19.
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