Soft Bound Version for Advanced Accounting 13th Edition
Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
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Chapter 5, Problem 35P

a.

To determine

Prepare a worksheet to consolidate the separate 2018 financial statements for Company G and Company K.

a.

Expert Solution
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Explanation of Solution

Worksheet to consolidate the separate 2018 financial statements for Company G and Company K:

Company G and Company K
 Consolidation Worksheet
 Year ending December 31, 2018
 Income statement Company G Company K Debit Credit Non-controlling interest Consolidated Balances
 Revenues $    (800,000) $       (500,000) $     200,000   $(1,100,000)
 Cost of goods sold $      500,000 $        300,000 $       12,000 $            10,000  $     602,000
     $          200,000  
 Operating expense $      100,000 $          60,000 E 5,000   $     165,000
 Equity in income of Company K $      (84,000)  I 84,000   $                -
 Net income $    (284,000) $       (140,000)    
 Consolidated net income      $   (333,000)
 Share of non-controlling interest in net income     $     (53,200) $       53,200
 Share of controlling interest in net income      $   (279,800)
       
 Balance Sheet      
 Cash $      177,000 $          90,000    $     267,000
 Accounts Receivables $      356,000 $        410,000  $            40,000  $     726,000
 Inventory $      440,000 $        320,000  $            12,000  $     748,000
 Investment in Company K $      726,000 $                    - D 36,000 $              9,000  
     $          612,000  
     $            84,000  
     $            57,000  
 Land $      180,000 $        390,000  $            40,000  $     530,000
 Building and equipment $      496,000 $        300,000    $     796,000
 Customer list $      380,000 $        110,000 A 95,000 E 5,000  $       90,000
 Total assets $   2,755,000 $     1,620,000    $  3,157,000
       
 Liabilities $    (480,000) $       (400,000) $       40,000   $   (920,000)
 Common stock $    (610,000) $       (320,000) $     320,000   $   (610,000)
 Additional paid-in capital $                 - $         (90,000) $       90,000   $                -
 Retained earnings $ (1,285,000) $       (700,000)    $(1,231,800)
 Non-controlling interest in Company K    $          408,000 $    408,000 
     A $38,000 $      38,000 
      $    475,200 $     475,200
 Total liabilities and equity $ (2,375,000) $    (1,510,000) $  1,551,000 $       1,551,000  $  3,157,000

Table: (1)

Working note:

Statement of retained earningsCompany GCompany KDebitCreditNon-controlling interestConsolidated Balances
Retained earnings on 01/01 $ (1,116,000) $       (620,000) $       40,000   $(1,067,000)
    $         9,000   
    $       10,000   
    $     610,000   
Net Income $    (284,000) $       (140,000)    $   (279,800)
Dividends declared $      115,000 $          60,000  D 36,000 $      24,000 $     115,000
Retained earnings on 31/12 $ (1,285,000) $       (700,000)    $(1,231,800)

Table: (2)

b.

To determine

Explain how the consolidation entries in requirement (a) would have differed if Company G had sold a building with a $60,000 book value (cost of $140,000) to Company K for $100,000 instead of land.

b.

Expert Solution
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Explanation of Solution

Entry TA:

DateAccounts Title and ExplanationPost Ref.Debit ($)Credit ($)
 Retained earnings of Company K on 01/01/2013  $ 36,000 
 Buildings  $ 40,000 
 Accumulated depreciation   $ 76,000
 (being excess depreciation removed)   

Table: (3)

Entry ED:

DateAccounts Title and ExplanationPost Ref.Debit ($)Credit ($)
 Accumulated depreciation  $   4,000 
 Depreciation expense   $   4,000
 (being excess depreciation on building recorded)   

Table: (4)

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