Required a. Prepare the consolidation entry needed to complete a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny. b. Prepare a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny.

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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Penny Manufacturing Company acquired 75 percent of Saul Corporation stock at underlying book value. At the date of acquisition,
the fair value of the noncontrolling interest was equal to 25 percent of Saul's book value. The balance sheets of the two companies
for January 1, 20X1, are as follows:
PENNY MANUFACTURING COMPANY
Balance Sheet
January 1, 20X1
Cash
Accounts Receivable
Inventory
Buildings & Equipment
Less: Accumulated Depreciation
Investment in Saul Corporation
Total Assets
$ 227,500
60,000
100,000
600,000
(150,000)
262,500
$1,100,000
Cash
Accounts Receivable
Inventory
Buildings & Equipment
Less: Accumulated Depreciation
Total Assets
Accounts Payable
Bonds Payable
Common Stock
Additional Paid-In Capital
Retained Earnings
Total Liabilities & Equities
$ 50,000
400,000
200,000
50,000
400,000
$1,100,000
SAUL CORPORATION
Balance Sheet
January 1, 20X1
$ 60,000
Accounts Payable
$ 50,000
100,000
Bonds Payable
300,000
180,000
Common Stock ($10 par)
100,000
600,000
Additional Paid-In Capital
50,000
(240,000)
Retained Earnings
200,000
$700,000
Total Liabilities & Equities
$700,000
On January 2, 20X1, Penny purchased an additional 2,500 shares of common stock directly from Saul for $150,000.
Required
a. Prepare the consolidation entry needed to complete a consolidated balance sheet worksheet immediately following
the issuance of additional shares to Penny.
b. Prepare a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny.
Transcribed Image Text:Penny Manufacturing Company acquired 75 percent of Saul Corporation stock at underlying book value. At the date of acquisition, the fair value of the noncontrolling interest was equal to 25 percent of Saul's book value. The balance sheets of the two companies for January 1, 20X1, are as follows: PENNY MANUFACTURING COMPANY Balance Sheet January 1, 20X1 Cash Accounts Receivable Inventory Buildings & Equipment Less: Accumulated Depreciation Investment in Saul Corporation Total Assets $ 227,500 60,000 100,000 600,000 (150,000) 262,500 $1,100,000 Cash Accounts Receivable Inventory Buildings & Equipment Less: Accumulated Depreciation Total Assets Accounts Payable Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Equities $ 50,000 400,000 200,000 50,000 400,000 $1,100,000 SAUL CORPORATION Balance Sheet January 1, 20X1 $ 60,000 Accounts Payable $ 50,000 100,000 Bonds Payable 300,000 180,000 Common Stock ($10 par) 100,000 600,000 Additional Paid-In Capital 50,000 (240,000) Retained Earnings 200,000 $700,000 Total Liabilities & Equities $700,000 On January 2, 20X1, Penny purchased an additional 2,500 shares of common stock directly from Saul for $150,000. Required a. Prepare the consolidation entry needed to complete a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny. b. Prepare a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny.
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