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Prepare the worksheet for consolidation purposes and the related eliminating entries on January 1, 20x9 and December 31, 20x19

Prepare the worksheet for consolidation purposes and the related eliminating entries on January 1, 20x9 and December 31, 20x19

FINANCIAL ACCOUNTING
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 worksheet for consolidation purposes and the related eliminating entries on January 1, 20x9 and December 31, 20x19

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 Cash 700,000 100,000 100,000 Inventory 300,000 50,000 55,000 PPE 1,000,000 350,000 365,000 Liabilities 500,000 200,000 200,000 Outstanding Shares Retained earnings 1,000,000 200,000 500,000 100,000 Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow: INCOME AND RETAINED EARNINGS Parent Subsidiary Company Company Sales 800,000 550,000 Dividend income 40,000 Cost of sales Operating expenses (480,000) (60,000) 300,000 (250,000) (150,000) Net income 150,000 Retained earnings, Jan 1, 2019 500,000 100,000 Dividends declared (100,000) (50,000) Retained earnings end 700,000 200,000 BALANCE SHEET Cash 300,000 125,000 Receivables 100,000 30,000 Inventory 650,000 45,000 Investment in Subsidiary 350,000 PPE 900,000 2,300,000 350,000 Total 550,000 Liabilities 600,000 150,000 Outstanding shares Retained earnings 1,000,000 200,000 700,000 200,000 Total 2,300,000 550,000 Additional Information: 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 Cash 700,000 100,000 100,000 Inventory 300,000 50,000 55,000 PPE 1,000,000 350,000 365,000 Liabilities 500,000 200,000 200,000 Outstanding Shares Retained earnings 1,000,000 200,000 500,000 100,000 Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow: INCOME AND RETAINED EARNINGS Parent Subsidiary Company Company Sales 800,000 550,000 Dividend income 40,000 Cost of sales Operating expenses (480,000) (60,000) 300,000 (250,000) (150,000) Net income 150,000 Retained earnings, Jan 1, 2019 500,000 100,000 Dividends declared (100,000) (50,000) Retained earnings end 700,000 200,000 BALANCE SHEET Cash 300,000 125,000 Receivables 100,000 30,000 Inventory 650,000 45,000 Investment in Subsidiary 350,000 PPE 900,000 2,300,000 350,000 Total 550,000 Liabilities 600,000 150,000 Outstanding shares Retained earnings 1,000,000 200,000 700,000 200,000 Total 2,300,000 550,000 Additional Information: 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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