Peel Company owns 90% of the common stock of Seacore Company. Seacore Company sells merchandise to...
Peel Company owns 90% of the common stock of Seacore Company.
Seacore Company sells merchandise to Peel Company at 20% above
cost. During 2014 and 2015, such sales amounted to $451,400 and
$482,600, respectively. At the end of each year, Peel Company had
in its inventory one-fourth of the goods purchased from Seacore
Company during that year.
Peel Company reported $309,400 in net income from its independent
operations in 2014 and 2015. Seacore Company reported net income of
$117,600 in each year and did not declare any dividends in any
year. There were no intercompany sales prior to 2014.
Prepare in general journal form all entries necessary on the consolidated financial statements workpaper to eliminate the effects of the intercompany sales for each of the years 2014 and 2015.
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Date |
Account Titles and Explanation |
Debit |
Credit |
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2014 |
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(To eliminate intercompany sales) |
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(To eliminate unrealized |
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2015 |
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(To eliminate intercompany sales) |
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(To recognize gross profit in |
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(To eliminate unrealized |
Homework Answers
| Date | Account Titles and Explanations | Debit | Credit |
| 2014 | Sales | $451,400 | |
| Purchases (cost of good sold) | $451,400 | ||
| (To eliminate intercompany sales) | |||
| 12/31 | Inventory (income statement) $112,850 - $94,042 | $18,808 | |
| Inventory (balance sheet) | $18,808 | ||
| (To eliminate unrealized intercompany profit in ending inventory) [451,400/4 = $112,850 = $112,850/1.2 = $94,042] | |||
| 2015 | sales | $482,600 | |
| Purchases (cost of good sold) | $482,600 | ||
| (To eliminate intercompany sales) | |||
| Beginning retained earning - Peel co. ($18,808 ×90%) | $16,927 | ||
| Noncontrolling interest ($18,808 ×10%) | $1,881 | ||
| Inventory ( Income statement) | $18,808 | ||
| (To recognize gross profit in beginning inventory realized in 2015) | |||
| 12/31 | Inventory (income statement) $120,650 - $100,542 | $20,108 | |
| Inventory (balance sheet) | $20,108 | ||
| (To eliminate unrealized intercompany profit in ending inventory) [$482,600/4 = $120,650 = $120,650/1.2 = $100,542] | |||
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Peel Company owns 90% of the common stock of Seacore Company.
Seacore Company sells merchandise to...
Peel Company owns 90% of the common stock of Seacore Company. Seacore Company sells merchandise to...
Peel Company owns 90% of the common stock of Seacore Company. Seacore Company sells merchandise to Peel Company at 20% above cost. During 2014 and 2015, such sales amounted to $451,400 and $482,600, respectively. At the end of each year, Peel Company had in its inventory one-fourth of the goods purchased from Seacore Company during that year. Peel Company reported $309,400 in net income from its independent operations in 2014 and 2015. Seacore Company reported net income of $117,600 in...
On January 1, 2013, Price Company acquired an 80% interest in the common stock of Smith...
On January 1, 2013, Price Company acquired an 80% interest in
the common stock of Smith Company on the open market for $811,500,
the book value at that date.
On January 1, 2014, Price Company purchased new equipment for
$15,000 from Smith Company. The equipment cost $9,700 and had an
estimated life of five years as of January 1, 2014.
During 2015, Price Company had merchandise sales to Smith Company
of $96,200; the merchandise was priced at 25% above Price...
Pinta Company, a forklift manufacturer, owns 80% of the voting stock of Standard Company. On Janu...
Pinta Company, a forklift manufacturer, owns 80% of the voting
stock of Standard Company. On January 1, 2014, Pinta Company sold
forklifts to Standard Company for $412,400. The forklifts, which
represented inventory to Pinta Company, had a cost to Pinta Company
of $322,400. The management of Standard Company estimated that the
forklifts had a useful life of nine years from the date of
purchase. Standard Company uses the straightline method to
depreciate its capital assets.
In 2014, Pinta Company reported...
P Company owns 80% of the outstanding stock of S Company. During 2014, S Company reported...
P Company owns 80% of the outstanding stock of S Company. During 2014, S Company reported net income of $500,120 and declared no dividends. At the end of the year, S Company’s inventory included $442,130 in unrealized profit on purchases from P Company. Intercompany sales for 2014 totaled $2,962,200. Calculate the amount of the noncontrolling interest to be deducted from consolidated income in arriving at 2014 controlling interest in consolidated net income.
1) Puma Company owns 80% of the common stock of Smarte Company. Puma sells merchandise to...
1) Puma Company owns 80% of the common stock of Smarte Company. Puma sells merchandise to Smarte at 20% above cost. During 2017 and 2018, intercompany sales amounted to $1,080,000 and $1,200,000 respectively. At the end of 2017, Smarte had one-fifth of the goods purchased that year from Puma in its ending inventory. Smarte’s 2018 ending inventory contained one-fourth of that year’s purchases from Puma. There were no intercompany sales prior to 2017. Required: A. Prepare in general journal form...
Peat Company owns a 90% interest in Seaton Company. The consolidated income statement drafted by the...
Peat Company owns a 90% interest in Seaton Company. The
consolidated income statement drafted by the controller of Peat
Company appeared as follows:
Peat
Company and Subsidiary
Consolidated Income Statement
for Year Ended December 31, 2015
Sales
$14,098,400
Cost of Sales
9,191,200
Operating Expense
1,784,000
10,975,200
Consolidated Income
3,123,200
Less Noncontrolling Interest
in Consolidated Income
212,320
Controlling Interest in
Consolidated Net Income
$2,910,880
During your audit you discover that intercompany sales transactions
were not reflected in the controller’s draft of...
Exercise 7-12 Pomeroy Corporation owns an 80% interest in Sherer Company and a 90% interest in...
Exercise 7-12
Pomeroy Corporation owns an 80% interest in Sherer Company and a
90% interest in Tampa Company. On January 2, 2014, Tampa Company
sold equipment with a book value of $631,800 to Sherer Company for
$705,300. This equipment has a remaining useful life of three
years. Sherer Company reported $108,800 and Tampa Company reported
$154,500 in net income (including sales to affiliates) in 2014.
Prepare the 2014 and 2015 consolidated statements workpaper entries
to eliminate the effects of this...
Exercise 4-7 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of...
Exercise 4-7 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $361,700. On that date, Sales Company's stockholders' equity consisted of common stock, $93,900; other contributed capital, $37,000; and retained earnings, $148,500. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2014 Sales Company earned $134,900 and declared and paid a $50,500 dividend....
Exercise 4-7 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of...
Exercise 4-7 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $361,700. On that date, Sales Company's stockholders' equity consisted of common stock, $93,900; other contributed capital, $37,000; and retained earnings, $148,500. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2014 Sales Company earned $134,900 and declared and paid a $50,500 dividend....
22) On January 1, 2014, Benson Corporation paid $800,000 to purchase 40% of the outstanding stock...
22) On January 1, 2014, Benson Corporation paid $800,000 to purchase 40% of the outstanding stock of Kroger Company. Kroger Company reported net income of $200,000 for the year ending December 31, 2014 and paid cash dividends of $60,000 during 2014. On January 1, 2015, Benson Corporation sells its entire investment in Kroger Company for $1,100,000. Benson Corporation will report a(n): A) realized gain on the sale of $300,000. B) unrealized gain on the sale of $300,000. C) realized gain...
Peel Company owns 90% of the common stock of Seacore Company. Seacore Company sells merchandise to Peel Company at 20% above cost. During 2014 and 2015, such sales amounted to $451,400 and $482,600, respectively. At the end of each year, Peel Company had in its inventory one-fourth of the goods purchased from Seacore Company during that year. Peel Company reported $309,400 in net income from its independent operations in 2014 and 2015. Seacore Company reported net income of $117,600 in...
On January 1, 2013, Price Company acquired an 80% interest in
the common stock of Smith Company on the open market for $811,500,
the book value at that date.
On January 1, 2014, Price Company purchased new equipment for
$15,000 from Smith Company. The equipment cost $9,700 and had an
estimated life of five years as of January 1, 2014.
During 2015, Price Company had merchandise sales to Smith Company
of $96,200; the merchandise was priced at 25% above Price...
Pinta Company, a forklift manufacturer, owns 80% of the voting
stock of Standard Company. On January 1, 2014, Pinta Company sold
forklifts to Standard Company for $412,400. The forklifts, which
represented inventory to Pinta Company, had a cost to Pinta Company
of $322,400. The management of Standard Company estimated that the
forklifts had a useful life of nine years from the date of
purchase. Standard Company uses the straightline method to
depreciate its capital assets.
In 2014, Pinta Company reported...
Peat Company owns a 90% interest in Seaton Company. The
consolidated income statement drafted by the controller of Peat
Company appeared as follows:
Peat
Company and Subsidiary
Consolidated Income Statement
for Year Ended December 31, 2015
Sales
$14,098,400
Cost of Sales
9,191,200
Operating Expense
1,784,000
10,975,200
Consolidated Income
3,123,200
Less Noncontrolling Interest
in Consolidated Income
212,320
Controlling Interest in
Consolidated Net Income
$2,910,880
During your audit you discover that intercompany sales transactions
were not reflected in the controller’s draft of...
Exercise 7-12
Pomeroy Corporation owns an 80% interest in Sherer Company and a
90% interest in Tampa Company. On January 2, 2014, Tampa Company
sold equipment with a book value of $631,800 to Sherer Company for
$705,300. This equipment has a remaining useful life of three
years. Sherer Company reported $108,800 and Tampa Company reported
$154,500 in net income (including sales to affiliates) in 2014.
Prepare the 2014 and 2015 consolidated statements workpaper entries
to eliminate the effects of this...
Exercise 4-7 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $361,700. On that date, Sales Company's stockholders' equity consisted of common stock, $93,900; other contributed capital, $37,000; and retained earnings, $148,500. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2014 Sales Company earned $134,900 and declared and paid a $50,500 dividend....
Exercise 4-7 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $361,700. On that date, Sales Company's stockholders' equity consisted of common stock, $93,900; other contributed capital, $37,000; and retained earnings, $148,500. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2014 Sales Company earned $134,900 and declared and paid a $50,500 dividend....
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