Chapter 6, Problem 6.33P

To determine

Introduction: A consolidated worksheet is used to prepare the consolidated financial statements of the parent company and its subsidiary. It reflects the individual values of the parent and the subsidiary and then one consolidated figure for both the entities.

Three part consolidation worksheet for financial year ending December 31, 20X9

Answer to Problem 6.33P

The consolidated net income as per consolidated worksheet is $498,000

The consolidated retained earnings as per consolidated worksheet is $938,000

The consolidated total assets and liabilities as per consolidated worksheet is $4,786,000

Explanation of Solution

Consolidated worksheet

Particulars	F $	B $	Eliminations		Consolidated $
Income statement			Debit $	Credit $
Sales	3,800,000	1,500,000	180,000		5,120,000
Gain on sale of warehouse	30,000				30,000
Less:
Cost of goods sold	(2,360,000)	(870,000)		162,000	(3,068,000)
Operating expenses	(1,100,000)	(440,000)	9,000		(1,549,000)
Goodwill impairment			35000		(35,000)
Income from B	128,000		172,000	44,000	0
Net income	498,000	190,000	396,000	206,000	498,000
Statement of retained earnings
Retained earnings Jan 1	440,000	156,000	156,000		440,000
Income, from above	498,000	190,000	396,000	206,000	498,000
Dividends declared		(40,000)			0
Retained earnings as on Dec 1 carried forward	938,000	306,000	552,000	246,000	938,000
Balance sheet
Cash	570,000	150,000			720,000
Accounts receivable	860,000	350,000		86,000	1,124,000
Inventories	1,060,000	410,000		18,000	1,452,000
Land, building and equipment	1,320,000	680,000	54,000		2,054,000
Less: Accumulated depreciation	(370,000)	(210,000)		9,000	(589,000)
Investment in B	838,000			768,000
				70,000	0
Goodwill			25,000		25,000
Total assets	4,278,000	1,380,000	79,000	951,000	4,786,000
Accounts payable and accrued expenses	1,340,000	594,000	86,000		1,848,000
Common stock	1,700,000	400,000	400,000		1,700,000
Additional paid in capital	300,000	80,000	80,000		300,000
Retained earnings	938,000	306,000	552,000	246,000	938,000
Total liabilities and equity	4,278,000	1,380,000	1,118,000	246,000	4,786,000