Scribd Logo
Upload

Welcome to Scribd!

  • 200 views

    A4 Palacio

    Uploaded by

    Pinky Daisies
    The financial statements summarize the assets, liabilities, and income of Pelt Co. and Sleet Co. for the second year after Pelt acquired an 80% ownership stake in Sleet. Key details include: - Pelt Co.'s total assets were $2.6 million, while Sleet Co.'s were $810,000. Pelt recorded a $900,000 investment in Sleet Co. on its balance sheet. - Pelt Co. had $438,000 in net income, while Sleet Co. had $120,000. - Consolidated net income for the two companies was $486,000 after accounting for depreciation and Pelt Co.'

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd

    A4 Palacio

    Uploaded by

    Pinky Daisies
    200 views3 pages
    The financial statements summarize the assets, liabilities, and income of Pelt Co. and Sleet Co. for the second year after Pelt acquired an 80% ownership stake in Sleet. Key details include: - Pelt Co.'s total assets were $2.6 million, while Sleet Co.'s were $810,000. Pelt recorded a $900,000 investment in Sleet Co. on its balance sheet. - Pelt Co. had $438,000 in net income, while Sleet Co. had $120,000. - Consolidated net income for the two companies was $486,000 after accounting for depreciation and Pelt Co.'

    Original Title

    A4 PALACIO

    Copyright

    © © All Rights Reserved

    Available Formats

    XLSX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The financial statements summarize the assets, liabilities, and income of Pelt Co. and Sleet Co. for the second year after Pelt acquired an 80% ownership stake in Sleet. Key details include: - Pelt Co.'s total assets were $2.6 million, while Sleet Co.'s were $810,000. Pelt recorded a $900,000 investment in Sleet Co. on its balance sheet. - Pelt Co. had $438,000 in net income, while Sleet Co. had $120,000. - Consolidated net income for the two companies was $486,000 after accounting for depreciation and Pelt Co.'

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    200 views3 pages

    A4 Palacio

    Uploaded by

    Pinky Daisies
    The financial statements summarize the assets, liabilities, and income of Pelt Co. and Sleet Co. for the second year after Pelt acquired an 80% ownership stake in Sleet. Key details include: - Pelt Co.'s total assets were $2.6 million, while Sleet Co.'s were $810,000. Pelt recorded a $900,000 investment in Sleet Co. on its balance sheet. - Pelt Co. had $438,000 in net income, while Sleet Co. had $120,000. - Consolidated net income for the two companies was $486,000 after accounting for depreciation and Pelt Co.'

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    You are on page 1of 3

    4 PELT CO & SLEET CO.

    SECOND YEAR - AFTER ACQUISITION

    The financial statement of the two companies for the Year XXX (Second Year) were as follows:

    A BALANCE SHEET PELT CO. SLEET CO.


    Cash 390,000 108,000
    Accounts receivable 450,000 240,000
    Inventories 330,000 150,000
    Land 150,000 120,000
    Plant & equipment 384,000 192,000
    Investment in Sleet Co. 900,000 0

    Total assets 2,604,000 810,000

    Accounts payable 270,000 105,000


    Ordinary shares, P 10 par C/S 600,000 150,000
    Retained earnings 1,734,000 555,000
    MINAS 0 0

    Total liabilities & equity 2,604,000 810,000

    B INCOME STATEMENT
    Sales 1,758,000 750,000
    Cost of sales 756,000 300,000

    Gross income 1,002,000 450,000


    Dividend income 30,000 0

    Total income 1,032,000 450,000


    Operating expenses 594,000 330,000

    NET INCOME 438,000 120,000

    C RETAINED EARNINGS STATEMENT SECOND YEAR


    Retained earnings, Jan 1, XXX 1,446,000 472,500
    Add: Net income 438,000 120,000
    1,884,000 592,500
    Less Dividends 150,000 37,500

    Retained earnings, Dec 31, XXX 1,734,000 555,000

    PELT & SLEET COMPANIES SECOND YEAR - AFTER ACQUISITION

    REQUIRED:

    1. Journal entry on PELT Company's Books during the second year after acquisition DEBIT CREDIT

    Cash 37,500 (80%) 30,000


    Dividend Income 30,000

    2. Compute Cost Book Value Differential to facilitate Working Paper preparation


    100% PARENT MINORITY
    Book value of Net Assets acquired
    Common stock 150,000
    Retained Earnings 360,000
    510,000 (80%) 408,000 102,000
    Allocated Difference:
    Inventory 15,000 (80%) (12,000) (3,000)
    Land 75,000 (80%) (60,000) (15,000)
    Equipment 225,000 (80%) (180,000) (45,000)
    315,000 252,000

    GOODWILL, upon acquisition 240,000 63,000

    MINORITY INTEREST IN THE NET ASSETS OF THE SUB 165,000

    3. Compute the Consolidated Net Income


    ESI MINI
    Share in Sleet Co. Net Income for Second Year 120,000 (80%) 96,000 24,000

    Depreciation 225,000 /10 (18,000) (4,500)


    78,000 19,500

    Pelt Co. net income from own operations 438,000 - 30,000 408,000

    CONSOLIDATED NET INCOME 486,000

    CONSOLIDATED RETAINED EARNINGS


    Retained earnings , Dec. 31 - Pelt 1,734,000
    Add: Pelt Co. share of Sleet Co. adjusted net increase in earnings from
    date of acquisition to the current year
    Increase [ 472500 - 360000 x (80%) ] 90,000

    Consolidated Retained Earnings Dec. 31, Second Year 1,824,000

    END OF SECOND YEAR AFTER ACQUISITION


    4. ELIMINATION ENTRIES

    a Share capital 150,000


    Retained earnings, Jan 1 360,000
    Investment in Sleet stocks 408,000
    MINAS 102,000

    b Inventories 15,000
    Land 75,000
    Plant & Equipment 225,000
    Investment in B stocks 252,000
    MINAS 63,000

    c Goodwill 240,000
    Investment in B stocks 240,000

    d Dividends income 37,500 (80%) 30,000


    Minority Interest in NAS (20%) 7,500
    Dividends 37,500

    e Retained Earnings - Jan. 1 33,000


    MINAS 33,000

    f Retained earnings - Jan. 1 37,500


    Expenses Increase in Depn (225,000/10) 22,500
    Inventories 15,000
    Plant & Equipment 45,000

    g Minority Interest Net Income 19,500


    Minority Interest in NAS 19,500
    '5. WORKING PAPER

    ELIMINATIONS CONSOLI
    BALANCE SHEET PELT SLEET DEBIT CREDIT BS
    Cash 390,000 108,000 498,000
    Accounts receivable - net 450,000 240,000 690,000
    Inventories 330,000 150,000 b 15,000 f 15,000 480,000
    Land 150,000 120,000 b 75,000 345,000
    Plant & equipment 384,000 192,000 b 225,000 f 45,000 756,000
    a 408,000
    INVESTMENT IN SLEET STOCKS 900,000 b 252,000 0
    c 240,000

    Goodwill 0 c 240,000 240,000

    Total assets 2,604,000 810,000 3,009,000

    Accounts payable 270,000 105,000 375,000


    Ordinary shares 600,000 150,000 a 150,000 600,000

    Retained earnings 1,734,000 555,000 1,824,000


    a 102,000
    MINORITY INTEREST (MINAS) d 7,500 b 63,000 210,000
    g 19,500
    e 33,000

    Total liabilities & equity 2,604,000 810,000 3,009,000

    INCOME STATEMENT
    Sales 1,758,000 750,000 2,508,000
    Cost of sales 756,000 300,000 1,056,000

    Gross income 1,002,000 450,000 1,452,000


    Dividend income 30,000 - d 30,000 0

    Total income 1,032,000 450,000 1,452,000


    Operating expenses 594,000 330,000 f 22,500 946,500

    NET INCOME 438,000 120,000 505,500

    Minority Interest Net Income MINI g 19,500 19,500

    CONSOLIDATED NET INCOME 486,000

    RETAINED EARNINGS
    Retained earnings, Jan 1,2ndYr 1,446,000 472,500 a 360,000
    f 37,500
    e 33,000 1,488,000
    Add: Net income 438,000 120,000 486,000
    1,884,000 592,500 1,974,000
    Less Dividends 150,000 37,500 d 37,500 150,000

    Retained earnings, Dec 31,2ndYr 1,734,000 555,000 1,215,000 1,215,000 1,824,000

    You might also like

    pFad - Phonifier reborn

    Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

    Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


    Alternative Proxies:

    Alternative Proxy

    pFad Proxy

    pFad v3 Proxy

    pFad v4 Proxy