PROBLEM 2: On 1/1/2014 WWW purchased all of the stock of WWW for book value when...
PROBLEM 2: On 1/1/2014 WWW purchased all of the stock of WWW for book value when VVV had $1,000,000 in retained earnings and $3,000,000 in common stock. [note: this is the balance sheet given in problem 1b, but for this problem we are buying 100% at book value]
On 12/31/2014 the balance sheets of VVV and WWW Companies were as follows:
VVV WWW
Cash $1,200,000 $5,000,000
a/r $2,000,000 $7,000,000
land $1,000,000 $3,000,000
equipment $2,000,000 $9,000,000
a/d equip $1,100,000 $1,800,000
investment VVV ?
total assets $5,100,000 $23,000,000
a/p $1,000,000 $2,000,000
c/s $3,000,000 $12,000,000
r/e $1,100,000 ?
Notes: The equipment has a 10 year life with no salvage.
Both VVV and WWW paid dividends this year.
Income statements for the year are as follows:
VVV WWW
Sales 830,000 4,500,000
Cogs 600,000 2,800,000
Gross profit 230,000 1,700,000
Dep exp 100,000 800,000
Invest inc. 0 ?
Income 130000 ?
REQUIRED:
- MAKE THE JOURNAL ENTRIES WWW MAKES THIS YEAR BASED ON ITS OWNERSHIP OF VVV (LET ME KNOW WHAT METHOD YOU ARE USING)
- MAKE THE WORKSHEET ENTRIES NEEDED AT 12/31
- PREPARE THE CONSOLIDATED BALANCE SHEET
D. PREPARE THE CONSOLIDATED INCOME STATEMENT
Homework Answers
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PROBLEM 2: On 1/1/2014 WWW purchased all of the stock of WWW for
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