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
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
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) | ||
Balance Sheet | |||||
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
correct answer general accounting
What is kevins hourly rate of pay?
Tutor answer please
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
- Financial Accounting Questionarrow_forwardhi expert please help mearrow_forwardParsons Company is planning to produce 2, 100 units of product in 2017. Each unit requires 2.20 pounds of materials at $6.20 per pound and a half-hour of labor at $12.00 per hour. The overhead rate is 40% of direct labor. (a) Compute the budgeted amounts for 2017 for direct materials to be used, direct labor, and applied overhead. (b) Compute the standard cost of one unit of product.arrow_forward
- hello teacher plz ansarrow_forwardSuperior Uniforms produce uniforms. The company allocates manufacturing overhead based on the machine hours each job uses. Superior Uniforms reports the following cost data for the past year: Direct labor hours Budget Actual 7,000 6,000 hours hours 7,000 6,300 hours hours Machine hours Depreciation on salespeople's autos Indirect materials Depreciation on trucks used to deliver uniforms to customers Depreciation on plant and equipment $23,000 $23,000 $ 49,000 $50,500 $13,500 $12,000 $ 64,000 $66,000 $ 43,500 $46,500 Indirect manufacturing labor Customer service hotline Plant utilities Direct labor cost $ 21,500 $23,000 $46,500 $ 47,500 $ 72,500 $85,500 Compute the predetermined manufacturing overhead rate.arrow_forwardneed help with this General accounting questionarrow_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
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education