Question

The December 31, 20X8, balance sheets for Pint Corporation and its 70 percent-owned subsidiary Saloon Company contained the following summarized amounts: PINT CORPORATION AND SALOON COMPANY Balance Sheets December 31, 20x8 Pint Saloon Corporation Company Assets Cash & Receivables $113,000 $ 48,000 Inventory 166,000 109,000 Buildings & Equipment (net) 312,000 289,000 Investment in Saloon Company 224,500 Total Assets $815,500 $446,000 Liabilities & Equity Accounts Payable $117,500 $ 67,000 Common Stock 182,000 142,000 Retained Earnings 516,000 237,000 Total Liabilities & Equity $815,500 $446,000 Pint acquired the shares of Saloon Company on January 1, 20x7. On December 31, 20X8, assume Pint sold inventory to Saloon during 20x8 for $110,000 and Saloon sold inventory to Pint for $304,000. Pint's balance sheet contains inventory items purchased from Saloon for $102,000. The items cost Saloon $62,000 to produce. In addition, Saloon's inventory contains goods it purchased from Pint for $32,000 that Pint had produced for $19,200. Assume Saloon reported net income of $73,000 and dividends of $14,600. Required: a. Prepare all consolidation entries needed to complete a consolidated balance sheet worksheet as of December 31, 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)

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Answer 1

Preparation of Journal Entries: SI NO Account Titles & Explanation Debit Credit 1 Common Stock Retained Earning Income from Saloon Company NCI in NI of Saloon Company Dividends Declared Investment in Saloon Company NCI in NA of Saloon Company $ 1,42,000 $ 1,78,600 $ 10,300 $ 9,900 $ $ $ 14,600 2,24,500 1,01,700 $ 4,14,000 2 Sales (110000+304000) Cost of Goods Sold (b/f) Inventory $ $ 3,61,200 52,800 Calculation of Retained Earning Ending Balance Less: Net income for the year Add: Dividend Beginning Balance $ $ $ $ 2,37,000 -73,000 14,600 1,78,600 $ 12,800 Downstream Transaction Profit deferred (32000-19200) Upstream Transaction Profit deferred (102000-62000) $ 40,000 Downstream Deferred Upstream Deferred Total Total $ 12,800 $ $ 40,000 $ $ 52,800 $ 70.00% NCI 30% 12,800 $ 28,000 $ 12,000 40,800 $ 12,000 Calculation of Book value: Particulars Beginning Book Value 70% & 30% Add: Net Income Less: Dividend Ending Book Value Less: Deferred Profit Investment or NCI Doors NCI $ 2,24,420 $ $ 51,100 $ $ -10,220 $ $ 2,65,300 $ $ -40,800 $ $ 2,24,500 $ 96,180 21,900 -4,380 1,13,700 -12,000 1,01,700 PINT CORPORATION & SUBSIDARY Consolidated Balance Sheet worksheet Dec 31 20X8 Cash and Receiables Inventory Building and equipment (net) Investment in Saloon Total Assets Pint Saloon DR $ 1,13,000 $ 48,000 $ 1,66,000 $ 1,09,000 $ 3,12,000 $ 2,89,000 $ 2,24,500 $ 8,15,500 $ 4,46,000 $ Consolidation Entries CR Consolidated $ 1,61,000 $ 52,800 $ 2,22,200 $ 6,01,000 $ 2,24,500 $ $ 2,77,300 $ 9,84,200 Accounts Payable Common Stock Retained Earning $ 1,17,500 $ $ 1,82,000 $ $ 5,16,000 $ $ $ 14,600 $ 1,84,500 1,82,000 5,16,000 67,000 1,42,000 $ 2,37,000 $ $ $ $ 1,42,000 1,78,600 $ 10,300 9,900 4,14,000 $ 3,61,200 NCI in NA of Saloon Total Liabilities and Equity $ 7,54,800 $ 4,46,000 $ 1,01,700 $ 1,01,700 4,77,500 $ 9,84,200 $ 8, 15,500 $ * Kindly Comment down for any clarifications/ queries and please upvote.