The balance sheets of Kim Ltd. and Steinbach Co. on December 31, Year 2, just before the transaction described below, were asfollows:Cash and receivablesInventoryProperty and equipment (net)Current liabilitiesLong-term debtCommon sharesRetained earningsNoOn December 31, Year 2, Kim purchased 60% of Steinbach's outstanding common shares for $144,000 in cash. Coincidentally,the carrying amounts of Steinbach's assets and liabilities were equal to fair value.ARequired:(a) Prepare the journal entries, if any, for Kim Ltd. and for Steinbach Co. to record this transaction. (If no entry is required for atransaction/event, select "No journal entry required" in the first account field.)BS.No12AssetsCash and receivablesCashKim$365,000Liabilities and EquityCurrent liabilitiesLong-term debtRetained earnings160,000193,000$ 718,000$ 138,000317,000100,000163,000$ 718,000CashInventoryProperty and equipment (net)Investment in SteinbachCommon sharesInvestment in SteinbachAnswer is complete but not entirely correct.General JournalCommon sharesBalance SheetDecember 31, Year 2Answer is not complete.Steinbach$ 89,000136,000278,000$ 503,000$ 124,000139,000150,00090,000$ 503,000›› › › *(b) Prepare balance sheets for Kim Ltd. and for Steinbach Co. at December 31, Year 2, after recording the transaction notedabove.✓Kim✔$ $ 509,000 $ 233,000136,000278,000$ 138,000$♥ 317,000✔$160,000193,000✔144,000150,000 X90,000 X$ 1,156,000 $ 737,000Steinbach33163,000✔$ 124,000139,000✔90,000Xx618,000 $ 353,000XxDebit144,000144,000 XCredit144,000144,000 (c) Prepare a consolidated balance sheet for Kim Ltd. after the transaction noted above.Answer is not complete.Kim Ltd.Consolidated Balance SheetDecember 31, Year 2AssetsCash and receivablesInventoryProperty and equipment (net)Common sharesLiabilities and EquityCurrent liabilitiesLong-term debtRetained earnings$ 742,000296,000471,000240,000 X$ 1,749,000$ 262,000456,000253,000 X$ 971,000

A consolidated balance sheet is a document that shows the entire financial situation of a parent…

The balance sheets of Kim Ltd. and Steinbach Co. on December 31, Year 2, just before the transaction described below, were as follows: Cash and receivables. Inventory Property and equipment (net) Current liabilities Long-term debt Common shares Retained earnings No On December 31, Year 2, Kim purchased 60% of Steinbach's outstanding common shares for $144,000 in cash. Coincidentally, the carrying amounts of Steinbach's assets and liabilities were equal to fair value. A Required: (a) Prepare the journal entries, if any, for Kim Ltd. and for Steinbach Co. to record this transaction. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) B S.No 1 2 Kim $365,000 160,000 193,000 $ 718,000 $ 138,000 317,000 100,000 163,000 $ 718,000 Cash Cash Steinbach $ 89,000 136,000 278,000 $ 503,000 Investment in Steinbach $ 124,000 139,000 150,000 90,000 $ 503,000 Answer is complete but not entirely correct. General Journal Common shares X x x x Debit 144,000 144,000 X Credit 144,000 144,000 X

The balance sheets of Kim Ltd. and Steinbach Co. on December 31, Year 2, just before the transaction described below, were as follows: Cash and receivables. Inventory Property and equipment (net) Current liabilities Long-term debt Common shares Retained earnings No On December 31, Year 2, Kim purchased 60% of Steinbach's outstanding common shares for $144,000 in cash. Coincidentally, the carrying amounts of Steinbach's assets and liabilities were equal to fair value. A Required: (a) Prepare the journal entries, if any, for Kim Ltd. and for Steinbach Co. to record this transaction. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) B S.No 1 2 Kim $365,000 160,000 193,000 $ 718,000 $ 138,000 317,000 100,000 163,000 $ 718,000 Cash Cash Steinbach $ 89,000 136,000 278,000 $ 503,000 Investment in Steinbach $ 124,000 139,000 150,000 90,000 $ 503,000 Answer is complete but not entirely correct. General Journal Common shares X x x x Debit 144,000 144,000 X Credit 144,000 144,000 X

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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Question

The balance sheets of Kim Ltd. and Steinbach Co. on December 31, Year 2, just before the transaction described below, were as
follows:
Cash and receivables
Inventory
Property and equipment (net)
Current liabilities
Long-term debt
Common shares
Retained earnings
No
On December 31, Year 2, Kim purchased 60% of Steinbach's outstanding common shares for $144,000 in cash. Coincidentally,
the carrying amounts of Steinbach's assets and liabilities were equal to fair value.
A
Required:
(a) Prepare the journal entries, if any, for Kim Ltd. and for Steinbach Co. to record this transaction. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field.)
B
S.No
1
2
Assets
Cash and receivables
Cash
Kim
$365,000
Liabilities and Equity
Current liabilities
Long-term debt
Retained earnings
160,000
193,000
$ 718,000
$ 138,000
317,000
100,000
163,000
$ 718,000
Cash
Inventory
Property and equipment (net)
Investment in Steinbach
Common shares
Investment in Steinbach
Answer is complete but not entirely correct.
General Journal
Common shares
Balance Sheet
December 31, Year 2
Answer is not complete.
Steinbach
$ 89,000
136,000
278,000
$ 503,000
$ 124,000
139,000
150,000
90,000
$ 503,000
›› › › *
(b) Prepare balance sheets for Kim Ltd. and for Steinbach Co. at December 31, Year 2, after recording the transaction noted
above.
✓
Kim
✔$ $ 509,000 $ 233,000
136,000
278,000
$ 138,000
$
♥ 317,000
✔
$
160,000
193,000✔
144,000
150,000 X
90,000 X
$ 1,156,000 $ 737,000
Steinbach
33
163,000✔
$ 124,000
139,000✔
90,000
X
x
618,000 $ 353,000
X
x
Debit
144,000
144,000 X
Credit
144,000
144,000

(c) Prepare a consolidated balance sheet for Kim Ltd. after the transaction noted above.
Answer is not complete.
Kim Ltd.
Consolidated Balance Sheet
December 31, Year 2
Assets
Cash and receivables
Inventory
Property and equipment (net)
Common shares
Liabilities and Equity
Current liabilities
Long-term debt
Retained earnings
$ 742,000
296,000
471,000
240,000 X
$ 1,749,000
$ 262,000
456,000
253,000 X
$ 971,000

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