Required: Journalize the above transaction when occurred. Journalize all the elimination entries in 31/12/2018, 2019. Complete the working paper to prepare consolidation statements
On January 1, 2018, Powers Company acquired 80% of the ordinary share of Scullery Company for $195,000. On this date Scullery had total owners' equity of $200,000 (ordinary share, premium ordinary and
1) On December 31, 2018, Powers sold equipment to Scullery at a gain of $10,000. During 2019, the equipment was used by Scullery. Depreciation is being computed using the straight-line method, a five-year life, and no salvage value.
2) during 2018scullery sold merchandise inventory 120,000 to powers with gross profit 25% which sold all except 20,000
3) On July 1, 2018 Scullery sold land $100,000 to Powers including 10,000 gain.
4) 1/1/2019 Scullery sold a truck to Powers for 70,000 and book value 50,000 with remaining useful life 5 years
5) On January 1, 2019, Powers purchased merchandise from scullery for $90,000 with gross profit 25%, which sold all except 30,000.
6) 31/12/2019 powers sold 200,000 merchandise to scullery which cost 180,000
The following is
|
trial balance 31/12/2019 |
||
|
|
, Powers |
Scullery |
|
cash |
25000 |
13000 |
|
|
120,000 |
32,000 |
|
inventories |
460,000 |
250,000 |
|
cost of goods sold |
650,000 |
400,000 |
|
operating expenses |
430,000 |
150,000 |
|
investment |
198,000 |
|
|
land |
250,000 |
50,000 |
|
building |
100,000 |
|
|
equipment |
220,000 |
150,000 |
|
trucks |
180,000 |
120,000 |
|
dividend |
30,000 |
20,000 |
|
total |
2663000 |
1185000 |
|
sales |
1,500,000 |
610,000 |
|
gain on sold truck |
|
20,000 |
|
account payable |
163,000 |
95,000 |
|
notes payable |
|
220,000 |
|
Shares |
350,000 |
10,000 |
|
Premium |
250,000 |
90,000 |
|
Retained |
400,000 |
140,000 |
|
Total |
2,663,000 |
1,185,000 |
Required:
- Journalize the above transaction when occurred.
- Journalize all the elimination entries in 31/12/2018, 2019.
- Complete the working paper to prepare consolidation statements
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