Consolidation Worksheet with Subsidiary Preferred Stock
Brown Company owns 90 percent of the common stock and 60 percent of the preferred stock of White Corporation, both acquired at underlying book value on January 1, 20X1. At that date, the fair value of the noncontrolling interest in White Corporation’s common stock was equal to 10 percent of the book value of its common stock. Trial balances for the companies on December 31, 20X6, are as follows:
| Brown Company | White Corporation | ||
Debit | Credit | Debit | Credit | |
Cash Accounts Receivable Dividends Receivable Inventory Buildings and Equipment (net) Investment in White Corporation: Preferred Stock Common Stock Cost of Goods Sold Depreciation and Amortization Other Expenses Dividends Declared: Preferred Stock Common Stock Accounts Payable Bonds Payable Dividends Payable Preferred Stock Common Stock Retained Earnings Sales Dividend Income Income from White Corporation | $ 58,000 80,000 9,000 100,000 360,000
120,000 364,500 280,000 40,000 131,000
60,000 |
$ 100,000 300,000
200,000 435,000 500,000 9,000 58,500 | $100,000 120,000
200,000 270,000
170,000 30,000 20,000
15,000 10,000 |
|
| ||||
| ||||
| ||||
$ 70,000 15,000 200,000 100,000 250,000 300,000 | ||||
Total | $1,602,500 | $1,602,500 | $935,000 | $935,000 |
White Corporation’s preferred shares pay a 7.5 percent annual dividend and are cumulative. Preferred dividends for 20X6 were declared on December 31, 20X6, and are to be paid January 1, 20X7.
Required
a. Prepare the eliminating entries needed to complete a full consolidation worksheet for 20X6.
b. Prepare a consolidation worksheet as of December 31, 20X6.
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