Financial accounting
A Company purchased 90% of shares of B Company on January 1, 2019. Transactions in between A and B Company during 2019 are as follows:
• There are sales of merchandise inventory between A and B Company. Sales figure of A Company includes the sales to B Company at the amount of $42,000 on cash. The cost of merchandise sold of this transaction were $34,000 for A. Those merchandise inventories has been sold to the third parties for $48,000 by B Company.
• A Company has account receivable from B Company at the amount of $21,000.
• A Company got service from B Company at the amount of $600. A Company reported this expense on the “Other Expenses” and B Company reported this income on the “Other Income”.
BALANCE SHEETS (DECEMBER 31, 2019) | ELIMINATIONS | A COMPANY CONSOLIDATED BALANCE SHEET (DECEMBER 31, 2019) | |||
A COMPANY | B COMPANY | ||||
CURRENT ASSETS | |||||
CASH and CASH EQUIVALANCE | 17,400 | 12,400 | |||
ACCOUNTS RECEIVABLE | 66,000 | 82,200 | |||
MERCHANDISE INVENTORY | 58,500 | 21,000 | |||
NON-CURRENT ASSETS | |||||
TANGIBLE ASSETS | 175,200 | 125,000 | |||
(-)ACCUMULATED DEPRECIATION | (55,400) | (46,600) | |||
SUBSIDIARY | 76,000 | - | |||
TOTAL ASSETS | 337,700 | 194,000 | |||
LIABILITIES | |||||
BANK LOAN | 87,600 | 90,000 | |||
ACCOUNTS PAYABLE | 52,500 | 18,400 | |||
TAX PAYABLE | 1,200 | 400 | |||
SHAREHOLDER’S EQUITIES | |||||
CAPITAL | 150,000 | 60,000 | |||
RETAINED EARNINGS | 28,200 | 18,000 | |||
NET INCOME | 18,200 | 7,200 | |||
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITIES | 337,700 | 194,000 | |||
INCOME STATEMENTS (FOR THE YEAR 2019) | ||||
A COMPANY | B COMPANY | ELIMINATIONS | A COMPANY CONSOLIDATED INCOME STATEMENT (FOR THE YEAR 2019) | |
SALES REVENUE | 176,000 | 78,000 | ||
COST of GOODS SALES | -148,000 | -56,000 | ||
GROSS MARGIN | 28,000 | 22,000 | ||
OPERATING EXPENSES | -8,000 | -15,000 | ||
INCOME AFTER OPERATING ACTIVIES | 20,000 | 7,000 | ||
OTHER INCOME | - | 600 | ||
OTHER EXPENCES | -600 | - | ||
INCOME BEFORE TAX | 19,400 | 7,600 |
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