P Corporation acquired 80% of S Corporation on January 1, 2017, for $240,000 cash whenS’s stockholders’ equity consisted of $100,000 of Common Stock and $30,000 of RetainedEarnings. The difference between the price paid by P and the underlying equity acquired in Swas allocated solely to a patent amortized over 10 years.P sold merchandise to S during the year in the amount of $30,000. $10,000 worth of inventoryis still on hand at the end of the year with an unrealized profit of $4,000. The separate companystatements for P and S appear in the first two columns of the partially completed consolidatedworkpaper.Required:Complete the consolidated workpaper for P and S for the year 2017. PSEliminationsNoncontrollingConsolidatedCorp.Dr.Cr.InterestBalancesIncome StatementSalesDividend IncomeCost of SalesOther ExpensesNoncontrolling Interest in IncomeNet IncomeRetained Earnings StatementRetained Earnings 1/1Corp.$ 200,000.00 $ 150,000.0016,000.00S(92,000.00) $ (47,000.00)S(23,000.00) $ (40,000.00)$ 101,000.00 $ 63,000.00$110,000.00 $ 30,000.00Add: Net Income$ 101,000.00 S 63,000.00Less: DividendsS(30,000.00) $(20,000.00)Retained Earnings 12/31$181,000.00 S73,000.0020,000.00 $19,000.0055,000.00Balance SheetCashAccounts Receivable-netInventoriesPatentLandEquipment and Buildings-netInvestment in S CorporationTotal AssetsEquitiesAccounts PayableCommon StockRetained Earnings1/1 Noncontrolling Interest in Net Assets12/31 Noncontrolling Interest in Net AssetsTotal Equities$ 120,000.00 $$ 140,000.00 $ 80,000.00$ 270,000.00 $420,000.00$ 600,000.00 $ 430,000.00$ 240,000.00$ 695,000.00 $1,004,000.00$ 909,000.00 $ 831,000.00$ 300,000.00 $ 100,000.00$ 181,000.00 $ 73,000.00$ 1,390,000.00 $ 1,004,000.00

Step 1: Noncontrolling Interest in Net IncomeP Corporation owns 80% of S Corporation, so the…

Answered: P S Eliminations Noncontrolling…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter4: Accounting For Retail Operations

Section: Chapter Questions

Problem 4.1MBA

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Question

P Corporation acquired 80% of S Corporation on January 1, 2017, for $240,000 cash when
S’s stockholders’ equity consisted of $100,000 of Common Stock and $30,000 of Retained
Earnings. The difference between the price paid by P and the underlying equity acquired in S
was allocated solely to a patent amortized over 10 years.

P sold merchandise to S during the year in the amount of $30,000. $10,000 worth of inventory
is still on hand at the end of the year with an unrealized profit of $4,000. The separate company
statements for P and S appear in the first two columns of the partially completed consolidated
workpaper.

Required:
Complete the consolidated workpaper for P and S for the year 2017.