![Loose Leaf for Fundamentals of Advanced Accounting](https://www.bartleby.com/isbn_cover_images/9781260151879/9781260151879_largeCoverImage.gif)
Loose Leaf for Fundamentals of Advanced Accounting
7th Edition
ISBN: 9781260151879
Author: Hoyle, Joe Ben; Schaefer, Thomas; Doupnik, Timothy
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 36P
a.
To determine
Show how Company P computed its $39,000 equity in Company S’s earnings balance.
a.
Expert Solution
![Check Mark](/static/check-mark.png)
Explanation of Solution
Computation of equity in Company S’s earnings balance:
Particulars | Amount |
Net income of the subsidiary | $(90,000) |
Amortization of patented technology | $ 29,000 |
Unrealized gross profit of 2017 realized | $(13,000) |
Unrealized gross profit of 2018 deferred | $ 19,000 |
Gain on sale of land deferred | $ 16,000 |
Equity in earnings | $(39,000) |
Table: (1)
Working note:
Computation of closing stock in 2017:
Particulars | Amount |
Sales price in 2017 | $ 125,000 |
Resold % | 74% |
Unsold % | 26.00% |
Closing stock in 2017 | $ 32,500 |
Table: (2)
Computation of unrealized profit on closing stock:
Year | Sales (A) | Cost of goods sold (B) | Profit | Closing stock (D) | Profit on closing stock |
2017 | $ 125,000 | $ 75,000 | $ 50,000 | $ 32,500 | $ 13,000 |
2018 | $ 140,000 | $ 70,000 | $ 70,000 | $ 38,000 | $ 19,000 |
Table: (3)
b.
To determine
Prepare a 2018 consolidated worksheet for Company P and Company S.
b.
Expert Solution
![Check Mark](/static/check-mark.png)
Explanation of Solution
Consolidated worksheet for Company P and Company S in 2018:
Company P and Company S | |||||
Consolidation Worksheet | |||||
Year ending December 31, 2018 | |||||
Consolidation entries | |||||
Accounts | Company P | Company S | Debit | Credit | Consolidated totals |
Revenues | $ (710,000) | $ (360,000) | $ 140,000 | $ (930,000) | |
Cost of goods sold | $ 305,000 | $ 189,000 | $ 19,000 | $ 140,000 | |
$ 13,000 | $ 360,000 | ||||
Other operating expenses | $ 167,000 | $ 81,000 | $ 29,000 | $ 277,000 | |
Gain on sale of land | $ (16,000) | $ - | $ 16,000 | $ - | |
Equity in Company S's earnings | $ (39,000) | $ - | $ 39,000 | $ - | |
Net income | $ (293,000) | $ (90,000) | $ (293,000) | ||
| |||||
Cash and receivables | $ 102,000 | $ 154,000 | $ 62,000 | $ 194,000 | |
Inventory | $ 311,000 | $ 110,000 | $ 19,000 | $ 402,000 | |
Investment in Company S | $ 691,000 | $ - | $ 25,000 | $ 429,000 | |
$ 248,000 | |||||
$ 39,000 | |||||
Trademarks | $ - | $ 58,000 | $ 45,000 | $ 103,000 | |
Land, buildings, and equip. (net) | $ 638,000 | $ 280,000 | $ 16,000 | $ 902,000 | |
Patented technology | $ - | $ 125,000 | $ 203,000 | $ 29,000 | $ 299,000 |
Total assets | $ 1,742,000 | $ 727,000 | $ 1,900,000 | ||
Liabilities | $ (462,000) | $ (220,000) | $ 62,000 | $ (620,000) | |
Common stock | $ (400,000) | $ (100,000) | $ (400,000) | ||
Additional paid-in capital | $ (300,000) | $ (50,000) | $ (300,000) | ||
| $ (580,000) | $ (357,000) | $ (580,000) | ||
Total liabilities and equity | $(1,742,000) | $ (727,000) | $ (1,900,000) |
Table: (4)
Working note:
Statement of retained earnings | Company P | Company S | Debit | Credit | Consolidated totals |
Retained earnings 1/1/18 | $ (367,000) | $ (292,000) | $ 13,000 | $ (367,000) | |
$ 279,000 | |||||
Net income | $ (293,000) | $ (90,000) | $ (293,000) | ||
Dividends declared | $ 80,000 | $ 25,000 | $ 25,000 | $ 80,000 | |
Retained earnings 12/31/18 | $ (580,000) | $ (357,000) | $ (580,000) |
Table: (5)
Computation of unamortized amount of patented technology:
Value of Unamortized patented technology as on 31/12/2017 | |
Original value as on 01/01/2017 | $ 232,000 |
Less: Amortization during the year | $ 29,000 |
Unamortized value as on 31/12/2017 | $ 203,000 |
Table: (6)
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Financial Accounting Question
On July 31, Harrison Company had an Accounts Receivable balance of $25,400. During the month of August, total credits to Accounts Receivable were $68,000 from customer payments. The August 31 Accounts Receivable balance was $18,500. What was the amount of credit sales during August? A) $68,000 B) $39,100 C) $61,100 D) $75,900 E) $7,900 help
Quick answer of this accounting questions
Chapter 5 Solutions
Loose Leaf for Fundamentals of Advanced Accounting
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - Prob. 5QCh. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - 12. Why does an intra-entity sale of a depreciable...Ch. 5 - Prob. 13QCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - 6. Use the same information as in problem (5)...Ch. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 1DYSCh. 5 - Prob. 2DYS
Knowledge Booster
Similar questions
- Tell me correct solutionsarrow_forwardNonearrow_forwardOn July 31, Harrison Company had an Accounts Receivable balance of $25,400. During the month of August, total credits to Accounts Receivable were $68,000 from customer payments. The August 31 Accounts Receivable balance was $18,500. What was the amount of credit sales during August? A) $68,000 B) $39,100 C) $61,100 D) $75,900 E) $7,900arrow_forward
- Accountingarrow_forwardA company can sell all the units it can produce of either Product X or Product Y but not both. Product X has a unit contribution margin of $18 and takes four machine hours to make, while Product Y has a unit contribution margin of $25 and takes five machine hours to make. If there are 6,000 machine hours available to manufacture a product, income will be: A. $6,000 more if Product X is made B. $6,000 less if Product Y is made C. $6,000 less if Product X is made D. the same if either product is made. Helparrow_forwardWhat is the average collection period of this financial accounting question?arrow_forward
- I don't need ai answer general accounting questionarrow_forwardAnswerarrow_forwardThe Falcon Company has reported the following data: Item Amount Operating expenses $ 1,80,00 Cost of goods sold $ 5,20,00 Net sales $9,70,00 Interest expense $ 45,000 Gain on sale of $ 35,000 assets Income tax expense $95,000 What was Falcon's gross profit? A. $450,000 B. $380,000 C. $250,000 D. $520,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
![Text book image](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
![Text book image](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education