Prepare the consolidation entries and a consolidation worksheet for the year ended Dec
31, 2019.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Consolidated financial statements are a group of entities financial statements that are presented as those of a single economic entity. They are the financial statements of a group in which the parent company and its subsidiaries introduce their assets, liabilities, equity, revenue, expenses and
Consolidated accounting is used to club a parent company's financial information and one or more subsidiaries. The parent prepares consolidated financial statements through
The required consolidation
Date | Account title and Explanation | Post Ref | Debit ($) | Credit ($) |
[ADJ] Investment in Subsidiary | ||||
Beg. | ||||
[C] Equity Income from Subsidiary | ||||
Income attributable to NCI | ||||
Dividends-Subsidiary (common) | ||||
Non-controlling Interest | ||||
[E] BOY Common Stock (S) | ||||
APIC | ||||
BOY Retained Earnings (S) | ||||
Investment in Subsidiary @ BOY | ||||
Non-controlling Interest @ BOY | ||||
[Ibond] Bond Payable net | ||||
Interest Income | ||||
Investment in Bonds (net) | ||||
Interest Expense | ||||
BOY Investment in Subsidiary |
Table (1)
An income statement that combines a parent company's revenue, expenses, and income, with its subsidiaries is known as consolidated income statement which provides an overall view of the corporation as a whole, rather than its individual parts.
A consolidated balance sheet provides a parent company's assets and liabilities and all of its subsidiaries in a legal document, without any differentiation on which items pertain to which companies. A party outside the economic unit embodied in the consolidated financial statements does not retain the equity of the shareholders of the subsidiary, and therefore should not be included in the consolidated shareholders' equities.
The consolidated worksheet for the year ended December 31, 2019 is shown below:
Income Statement | Parent | Subsidiary | Dr | Cr | Consolidated | |||||
Sales | $6,500,000 | $800,000 | $7,300,000 | |||||||
Cost of goods sold | (4,500,000) | (450,000) | (4,950,000) | |||||||
Gross Profit | 2,000,000 | 350,000 | 2,350,000 | |||||||
Operating and Other Expenses | (1,500,000) | (200,000) | (1,700,000) | |||||||
Bond Interest Income | 50,000 | [Ibond] | 50,000 | 0 | ||||||
Bond Interest Expense | (42,000) | [Ibond] | 42,000 | 0 | ||||||
Total Expenses | (1,450,000) | (242,000) | (1,700,000) | |||||||
Equity Income from Subsidiary | 30,000 | [C] | 30,000 | |||||||
Consolidated net Income | $580,000 | $108,000 | 650,000 | |||||||
Income attributable to NCI | [C] | 27,000 | (27,000) | |||||||
Income attributable to Controlling Interest | $580,000 | $108,000 | $623,000 | |||||||
Statement of Retained Earnings | ||||||||||
Beginning Retained Earnings | $760,000 | $276,000 | [E] | 276,000 | [ADJ] | 118,500 | $878,500 | |||
Income attributable to Controlling Interest | 580,000 | 108,000 | 623,000 | |||||||
Dividends declared | (200,000) | (40,000) | [C] | 40,000 | (200,000) | |||||
Ending retained Earnings | $1,140,000 | $344,000 | $1,301,500 | |||||||
Balance Sheet | ||||||||||
Assets | ||||||||||
Cash | $700,000 | $300,000 | $1,000,000 | |||||||
Accounts receivable | 800,000 | 500,000 | 1,300,000 | |||||||
Inventories | 1,000,000 | 800,000 | 1,800,000 | |||||||
Investment in subsidiary | 600,000 | [ADJ] | 118,500 | [E] | 694,500 | 0 | ||||
[Ibond] | 24,000 | |||||||||
[Ibond] | 740,000 | |||||||||
Investment in bond (net) | 740,000 | 0 | ||||||||
PPE, net | 3,000,000 | 1,250,000 | 4,250,000 | |||||||
Total Assets | $6,840,000 | $2,850,000 | 8,350,000 | |||||||
Liabilities and Stockholder's Equity | ||||||||||
Accounts payable | $800,000 | $250,000 | $1,050,000 | |||||||
Other Current liabilities | 900,000 | 400,000 | 1,300,000 | |||||||
Bond Payable (net) | 756,000 | [Ibond] | 756,000 | - | ||||||
Other long-term liabilities | 1,400,000 | 450,000 | 1,850,000 | |||||||
Common stock | 600,000 | 150,000 | [E] | 150,000 | 600,000 | |||||
APIC | 2,000,000 | 500,000 | [E] | 500,000 | 2,000,000 | |||||
Retained Earnings | 1,140,000 | 344,000 | 1,301,500 | |||||||
Non-controlling interest | [C] | 17,000 | 248,500 | |||||||
[E] | 231,500 | |||||||||
Total liabilities and equity | $6,840,000 | 2,850,000 | $1,907,500 | $1,907,500 | $8,350,000 | |||||
Want to see more full solutions like this?
Chapter 6 Solutions
ADVANCED ACCOUNTING
- A company has decided to purchase equipment, needing to borrow $100,000 from its local bank to make the purchase. The bank gives the company two options: (a) 60-month installment note with 4% interest or (b) 120-month installment note with 8% interest. Lenders often charge a higher interest rate for longer-term loans to compensate for additional risk of lending for a longer time period. Record $100,000 cash received from the issuance of the 120-month installment note with 8% interest.Record $100,000 cash received from the issuance of the 120-month installment note with 8% interest. Select the options to display a 120-month installment note with 12% interest. How much of the principal amount is due after the 60th payment?arrow_forward!??arrow_forwardaccounting questionarrow_forward
- 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)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)