FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
. Paulee Corporation paid $24,800 for an 80% interest in Sergio Corporation on January 1, 2013, at which time Sergio's
Sergio Corporation reported net income of $4,000 and paid dividends of $2,000 during 2013.
Paulee Corporation sold inventory items to Sergio during 2013 and 2014 as follows:
2013 2014
Paulee's sales to Sergio $5,000 $6,000
Paulee's cost of sales to Sergio 3,000 3,500
Unrealized profit at year-end 1,000 1,500
At December 31, 2014, the accounts payable of Sergio include $1,500 owed to Paulee for inventory purchases.
Required:
Financial statements of Paulee and Sergio appear in the first two columns of the partially completed working papers. Complete the consolidation working papers for Paulee Corporation and Subsidiary for the year ended December 31, 2014.
Transcribed Image Text:Eliminations
Paulee
Sergio
Debit
Credit
Consolidated
INCOME STATEMENT
Sales
Invest. income
from Sergio
$ 43,000
$20,000
6,700
( 22,000)
( 12,200)
( 8,000)
( 3,000)
Cost of Sales
lother expenses
Noncontrolling
interest share
$ 15,500
$ 9,000
Net income
Retained
Earnings 1/1
Add: Net income
Less: Dividends
Retained
Earnings 12/31
$ 8,000
9,000
( 5,000)
$ 9,000
15,500
( 10,000)
$ 14,500
$12,000
BALANCE SHEET
Cash
Net Receivables
Dividend
Receivable
Inventories
Goodwill
Plant assets-net
$ 5,400
14,000
$ 3,000
10,000
2,000
18,000
৪, 000
24,000
31,000
Investment in
Sergio
TOTAL ASSETS
28,100
$ 91,500
$52,000
LIAB.
& EQUITY
Accounts payable $ 17,500
Dividend payable
Jother debt
$12,500
7,000
2,500
12,500
10,000
Capital stock
Retained
Earnings
1/1 Noncntrl.
Interest
12/31 Noncntrl.
Interest
40,000
15,000
14,500
12,000
$ 91,500
$52,000
TOTAL LIAB. &
EQUITY
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