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Plexi Company purchased 85% of the outstanding common stock of Sesnor Company on January 1, 2009 for ss,70am NOTE COST METHOD USED BY PARENT Credit REAL Entn Jan. 1, 2009 Investment in Subsidiary -Sesnor 5,700,000 $ 5,700,000 The Sesnor Company bslance shet on i/i/09 and 12/31/12 are as follows: Fair Value 120,000 $ 260,000 350,000 450,000 1,275,000 $ 950,000 3200,000 $ 3,450,000 1,000,000 1,000,000 120,000 $ 350,000 1,275,000 $3,200,000 $2,500,000 Accounts Recelvable Net Plant Assets 1,500,000 Other Assets Total Assets 5.945,000 S 6360,000 Accounts Payable Other Liabilities 1,375,000 $ 1150,000 $1,375,000 $750,000 500,000 $325,000 $250,000 Total Labilities 1,875,000 $ 1475,000 Common Stock (Par $1) APIC 100,000 100,000 900,000 $ 900,000 $ 3,070,000 $ 3,885,000 4070,000$ 4,885,000 Total Liabilities & Equity 5945,000 6360,000 Retained Eamings Total Equity )| 859 Ownership 85% 15% 100% NCI Fair Value Given Up Book Value Received $ 5,700,000 $ $ 3,459,500 $ $2,240,500 $ 1,275,000 $ 212,500 $ $ 1,178,000 $ 1,178,000 S 1,005,882 6,705,882 $4,070,000 $ 2,635,882 $1,500,000 $250,000 $ 1,385,882 $ 1,385,882 610,500 395,382 225,000 37,500 207,882 207,882 Difference Land Other Liabilities Goodwill Balance During 2012, Sesnor Company declared dividends in the amount of During 2012, Sesnor Company had net income in the amount of $212,500 Sesnor Company Retained Earnings as of 12/31/2011 was 3,200,000 Ul PREPARE THE WORKPAPER (and related workpaper entriesJTHAT WOULD BE MADE IN THE PREPARATION OF THE CONSOuDATED FINANCIAL STATEMENTS ON DECEMBER 31, 2012 Cost Method-After Year of Acquisition the following workpaper entries are made entry? Debit Investment in Subsidiary-Sesnor Company 110,500 Retained Earnings 1/1Current Year - Parent $110,500Review the Retained Earnings Statement (below) and explain why dividend declared for Sesnor Co.i in the consolidated balance Workpaper Elimination) Entries Consoli Bala Subsidiary Parent Plexi CoSesnor Co. Retained Earnings 1/1 Beg. Of Current Year 3,96 Plexi Co. Sesnor Co. $ 3,850,000 3,2000003,200,00 (2) 140,250 $ 1,31 Net Income from above $ 732,500 935,000 s212,500 Divident Declared Plexi Co. Sesnor Co. 450,000 212,500 () 37,500 $ $ 250,000 Retained Earnings 12/31 End of Current Year 4,132,500 $ 385,000 3,412,500 323,000 102,750 Complete the balance sheet. Consoli Parent Subsidiary PlexiCo. Sesnor Co. CreditNCIBalan Debit Balance Sheet $ 450,000260,000 450,000 $875,000 950,000 Cash Accounts Receivable Inventory @ 12/31 Investment in Sub-Sesnor Co. Net Plant Assets Land Other Assets Goodwil Difference $750,000 $ $5,700,000 $ 150,000 $ $3,850,000$ 3,450,000 $250,0001,000,000 250,000 Total Assets 6,360,000 Liabilities Accounts Payable Other Liabilities $4,244,500 $ 1,150,000 998,000325,000 $ 5,242,500 $ 1,475,000 Total Liabilities Equity Common Stock Plexi Co. Sesnor Co. $ 250,000 $ 100,000 APIC Plexi Co. $ 2,400,000 $ Sesnor Co. Retained Earnings from above $ 4,132,500 $ 3,885,000 1/1 Noncontroling interest 12/31 Noncontrolling Interest Total Equity S 6,782,500 $ 4,885,000 Total uabilites and EquityS 12, 025,0006360,000workpaper? What does the following entry accomplish in the Debit Dividend Income 212,500 Dividend Declared-Sub-Sesnor Co 212,500 iew the entry below. Debit $100,000 Workpaper Entry (2) Common Stock - Sesnor Co. APIC- Sesnor Co. Retained Earnings-Sesnor Co. Difference 900,000 $ 3,200,000 $ 2,635,882 Investment in Subsidiary-Sesnor Company NCI $5,810,500 $ 1,025,382 w how the credit to Investment in Subsidiary and NCI (above) is calculated in the space provided elow Complete the entry to allocate the difference below. Plexi Co. and Subsidiary For the Year Ended December 31, 2012 Parent Subsidiary Consolidated Debit Credit NC Balance Sales Dividend Income $9,500,000$ 5,500,000 $ 212500 S $15,000,000 s 212,500 Total Revenue 9,712,500 $ 5,500,000 $15,000,000 COGS: Inventory 1/1 $750,000 $8,100,000$ 4,100,000 $8,850,000 $ 4,950,000 $875,000 $ $7,975,000$4,000,000 $425,000 $ S 580,000 S $ 8,980,000 $ 4565,000 $ 850,000 1,600,000 Available for Sale Inventory 12/31 Cost of Goods Sold $13,800,000 $11,975,000 $ 715,000 855,000 $13,545,000 1,455,000 140250 140,250 Selling Expense Other Expenses 290,000 $ 275,000 Total Expenses Noncontrolling Interest in Consolidated Inc Net Income to Retained Earnings732 500935,000212,500 140250 $131470 5 Demonstrate (below) how is the $140,250 in the NCI column calculated?

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Investment in Subsidiary Company-Sesnor Company 110500
              Retained Earnings 1/1 Current year-Parent 110500
The above entry is made to incorporate the profits earned by subsidiary after its acquisition
85% of (3200000-3070000) = $110500
Dividend Income 212500
         Dividend Declared Sub-Sesnor Company 212500
The above entry is made to accou t for the dividend declared by the subsidiary 85% of 250000 = $212500
Common Stock Sesnor Co. 100000
APIC Sesnor Co. 900000
Retained Earnings - Sesnor Co. 3200000
Difference 2635882
      Investment in Subsidiary Company-Sesnor Company 5810500
       NCI 1025382
The above entry is made at the time of Consolidation of Accounts of Subsidiary and it is used to eliminate own investment in Subsidiary and account for Non- Controlling Interest
Investment In Subsidiary = 5700000+85% of(3200000-3070000) = $5810500
Non- Controlling Interest = 15% of(100000+900000+3200000+2635882) = $1025382
Land 1500000
Goodwill 1385882
        Other liabilities 250000
         Difference

2635882
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