Problem

Sal is a 90 percent-owned subsidiary of Pig Corporation, acquired at book value several ye...

Sal is a 90 percent-owned subsidiary of Pig Corporation, acquired at book value several years ago. Comparative separate-company income statements for the affiliates for 2011 are as follows:

 

Pig Corporation

Sal Corporation

Sales

$750,000

$350,000

Income from Sal

54,000

Gain on building

15,000

Income credits

819,000

350,000

Cost of sales

500,000

200,000

Operating expenses

150,000

75,000

Income debits

650,000

275,000

Net income

$169,000

$ 75,000

On January 5, 2011, Pig sold a building with a 10-year remaining useful life to Sal at a gain of $15,000. Sal paid dividends of $50,000 during 2011.

REQUIRED

1. Reconstruct the journal entries made by Pig during 2011 to account for its investment in Sal. Explanations of the journal entries are required.


2. Prepare a consolidated income statement for Pig Corporation and Subsidiary for 2011.

Step-by-Step Solution

Request Professional Solution

Request Solution!

We need at least 10 more requests to produce the solution.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the solution will be notified once they are available.
Add your Solution
Textbook Solutions and Answers Search
Solutions For Problems in Chapter 6