ADV. ACCT LOOSELEAF W/ CONNECT ACCESS
13th Edition
ISBN: 9781266324857
Author: Hoyle
Publisher: MCG
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Question
Chapter 7, Problem 29P
To determine
Develop the worksheet entries necessary to derive the given reported balances.
Expert Solution & Answer

Explanation of Solution
The worksheet entries necessary to derive the given reported balances:
Entry G | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
15,000 | ||||
Cost of goods sold | 15,000 | |||
(being opening unrealized gross profit eliminated) | ||||
Entry *C1 | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
Retained earnings of Company D as on 01/01/18 | 7,000 | |||
Investment in Company O | 7,000 | |||
(being amortization expense of 2017 recorded) | ||||
Entry *C2 | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
Retained earnings of Company A as on 01/01/18 | 27,600 | |||
Investment in Company D | 27,600 | |||
(being excess amortization expense and deferral of inventory recorded) | ||||
Entry S1 | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
Common stock of Company O | 100,000 | |||
Retained earnings of Company O as on 01/01/2018 | 100,000 | |||
Investment in Company O | 140,000 | |||
Non controlling interest | 60,000 | |||
(being controlling and non-controlling interest recorded) | ||||
Entry S2 | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
Common stock of Company D | 120,000 | |||
Retained earnings of Company D as on 01/01/2018 | 378,000 | |||
Investment in Company D | 398,400 | |||
Non controlling interest | 99,600 | |||
(being controlling and non-controlling interest recorded) | ||||
Entry A | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
Copyrights | 22,500 | |||
Investment in Company D | 90,000 | |||
Investment in Company O | 77,000 | |||
Non controlling interest in Company D | 22,500 | |||
Non controlling interest in Company O | 33,000 | |||
(being assets transferred to controlling and non-controlling interest) | ||||
Entry I1 | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
Investment income | 144,000 | |||
Investment in Company D | 144,000 | |||
(being intra-entity equity income eliminated) | ||||
Entry I2 | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
Investment income | 49,000 | |||
Investment in Company O | 49,000 | |||
(being intra-entity equity income eliminated) | ||||
Entry D1 | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
Investment in Company D | 32,000 | |||
Dividend expense | 32,000 | |||
(being intra-entity dividend expense eliminated) | ||||
Entry D2 | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
Investment in Company O | 35,000 | |||
Dividend expense | 35,000 | |||
(being intra-entity dividend expense eliminated) | ||||
Entry E | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
Operating expenses | 16,250 | |||
Copyrights | 16,250 | |||
(being amortization expense of current year recorded) | ||||
Entry TI | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
Sales | 200,000 | |||
Cost of goods sold | 200,000 | |||
(being intra-entity sale eliminated) | ||||
Entry G | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit ($) | Credit ($) |
Cost of goods sold | 22,000 | |||
Inventory | 22,000 | |||
(being unrealized gross profit on ending inventory eliminated) | ||||
Table: (1)
Working note:
Computation of Net income attributable to non-controlling interest:
Particulars | Amount |
Non-controlling Interest in Company O's Income: | |
Reported income | $ 70,000 |
Excess fair value amortization | $ (10,000) |
Accrual-based income | $ 60,000 |
Outside ownership | 30% |
Net income attributable to non-controlling interest | $ 18,000 |
Table: (2)
Computation of Non-controlling Interest in Company D's Net Income:
Particulars | Amount |
Non-controlling Interest in Company D's Net Income: | |
Reported operating income | $ 131,000 |
Equity income investment in Company O | $ 42,000 |
Amortization expense | $ (6,250) |
2017 intra-entity inventory gross profit deferral | $ 15,000 |
2018 intra-entity inventory gross profit deferral | $ (22,000) |
Accrual-based income of Company D (2018) | $ 159,750 |
Outside ownership | 20% |
Net income attributable to non-controlling interest | $ 31,950 |
Table: (3)
Computation of Non-controlling interest in Company D as on 12/31/18:
Particulars | Amount |
Non-controlling interest in Company D Company | |
Non-controlling interest as on 01/01/18 | $ 99,600 |
Non-controlling interest as on 01/01/18 | $ 22,500 |
Non-controlling interest in Company D’s income | $ 31,950 |
Dividends declared to non-controlling interest | |
| $ (8,000) |
Non-controlling interest in Company D as on 12/31/18 | $ 146,050 |
Table: (4)
Computation of Non-controlling interest in Company O as on 12/31/18:
Particulars | Amount |
Non-controlling interest in Omega Company | |
Non-controlling interest as on 01/01/18 | $ 60,000 |
Non-controlling interest in Company O’s income | $ 18,000 |
Non-controlling interest as on 01/01/18 | $ 33,000 |
Dividends declared to non-controlling interest | $ (15,000) |
Non-controlling interest in Company O as on 12/31/18 | $ 96,000 |
Table: (5)
Computation of amount to be
Particulars | Amount |
Excess amortization from Company D acquisition | |
| $ 10,000 |
Company D's share of excess amortization from Company O acquisition | |
$ 5,600 | |
Inventory profit deferral at 1/1/18 | $ 12,000 |
*C2 adjustment | $ 27,600 |
Table: (6)
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