Polka Corporation acquired 100 percent of Song Company's voting stock on January 1, 20X4, at underlying book value. Polka uses the equity method in accounting for its ownership of Song. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Song Company Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Song Company Required: Polka Corporation Credit Debit $244,000 Song Company Debit $ 169,000 Credit 312,000 14,000 88,000 502,000 256,000 24,000 169,000 67,000 20,000 $183,000 $ 84,000 55,000 35,000 106,000 194,000 96,000 480,000 140,000 224,000 40,000 142,000 $ 603,000 $ 603,000 86,000 $1,262,000 $1,262,000 a. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements. b. Prepare a three-part consolidation worksheet as of December 31, 20X4 Journal entry worksheet A B Record the basic consolidation entry. Note: Enter debits before credits. Event 1 Accounts Debit Credit Journal entry worksheet < A B Record the optional accumulated depreciation consolidation entry. Note: Enter debits before credits. Event 2 Accounts Debit Credit > Income Statement Sales Less: Depreciation expense Less: Other expenses Income from Song Company Net income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending balance Balance Sheet Current assets Depreciable assets Less: Accumulated depreciation Investment in Song Company Total Assets Current liabilities Long-term debt Common stock Retained earnings Total Liabilities and Equity Consolidation Entries Polka Song Corporation Company Debit Consolidated Credit
Polka Corporation acquired 100 percent of Song Company's voting stock on January 1, 20X4, at underlying book value. Polka uses the equity method in accounting for its ownership of Song. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Song Company Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Song Company Required: Polka Corporation Credit Debit $244,000 Song Company Debit $ 169,000 Credit 312,000 14,000 88,000 502,000 256,000 24,000 169,000 67,000 20,000 $183,000 $ 84,000 55,000 35,000 106,000 194,000 96,000 480,000 140,000 224,000 40,000 142,000 $ 603,000 $ 603,000 86,000 $1,262,000 $1,262,000 a. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements. b. Prepare a three-part consolidation worksheet as of December 31, 20X4 Journal entry worksheet A B Record the basic consolidation entry. Note: Enter debits before credits. Event 1 Accounts Debit Credit Journal entry worksheet < A B Record the optional accumulated depreciation consolidation entry. Note: Enter debits before credits. Event 2 Accounts Debit Credit > Income Statement Sales Less: Depreciation expense Less: Other expenses Income from Song Company Net income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending balance Balance Sheet Current assets Depreciable assets Less: Accumulated depreciation Investment in Song Company Total Assets Current liabilities Long-term debt Common stock Retained earnings Total Liabilities and Equity Consolidation Entries Polka Song Corporation Company Debit Consolidated Credit
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 35P
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Transcribed Image Text:Polka Corporation acquired 100 percent of Song Company's voting stock on January 1, 20X4, at underlying book value. Polka uses the
equity method in accounting for its ownership of Song. On December 31, 20X4, the trial balances of the two companies are as follows:
Item
Current Assets
Depreciable Assets
Investment in Song Company
Depreciation Expense
Other Expenses
Dividends Declared
Accumulated Depreciation
Current Liabilities
Long-Term Debt
Common Stock
Retained Earnings
Sales
Income from Song Company
Required:
Polka Corporation
Credit
Debit
$244,000
Song Company
Debit
$ 169,000
Credit
312,000
14,000
88,000
502,000
256,000
24,000
169,000
67,000
20,000
$183,000
$ 84,000
55,000
35,000
106,000
194,000
96,000
480,000
140,000
224,000
40,000
142,000
$ 603,000
$ 603,000
86,000
$1,262,000 $1,262,000
a. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements.
b. Prepare a three-part consolidation worksheet as of December 31, 20X4
Journal entry worksheet
A
B
Record the basic consolidation entry.
Note: Enter debits before credits.
Event
1
Accounts
Debit
Credit
Journal entry worksheet
<
A
B
Record the optional accumulated depreciation consolidation entry.
Note: Enter debits before credits.
Event
2
Accounts
Debit
Credit
>
Transcribed Image Text:Income Statement
Sales
Less: Depreciation expense
Less: Other expenses
Income from Song Company
Net income
Statement of Retained Earnings
Beginning balance
Net income
Less: Dividends declared
Ending balance
Balance Sheet
Current assets
Depreciable assets
Less: Accumulated depreciation
Investment in Song Company
Total Assets
Current liabilities
Long-term debt
Common stock
Retained earnings
Total Liabilities and Equity
Consolidation Entries
Polka
Song
Corporation
Company
Debit
Consolidated
Credit
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