On January 1, 2011, Plank Company purchased 80% of the outstanding capital stock of Scoba Company for $52,300. At that time, Scoba’s stockholders’ equity consisted of capital stock, $54,300; other contributed capital, $5,000; and retained earnings, $4,100. On December 31, 2015, the two companies’ trial balances were as follows: Plank Scoba Cash $41,800 $22,000 Accounts Receivable 21,000 17,100 Inventory 14,900 8,100 Investment in Scoba Company 68,940 —0— Land 52,800 47,000 Dividends Declared 9,900 7,760 Cost of Goods Sold 85,400 19,900 Other Expense 10,200 12,100 $304,940 $133,960 Accounts Payable $ 11,900 $ 6,000 Other Liabilities 4,900 4,000 Common Stock 101,500 54,300 Other Contributed Capital 19,600 5,000 Retained Earnings, 1/1 49,400 15,200 Sales 103,672 49,460 Equity in Subsidiary Income 13,968 —0— $304,940 $133,960 The accounts payable of Scoba Company include $2,900 payable to Plank Company. (b) Prepare a consolidated statements workpaper at December 31, 2015. Any difference between book value and the value implied by the purchase price relates to subsidiary land. (List items that increase retained earnings first.)

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter6: Corporations: Redemptions And Liquidations

Section: Chapter Questions

Problem 64P

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On January 1, 2011, Plank Company purchased 80% of the outstanding capital stock of Scoba Company for $52,300. At that time, Scoba’s stockholders’ equity consisted of capital stock, $54,300; other contributed capital, $5,000; and retained earnings, $4,100. On December 31, 2015, the two companies’ trial balances were as follows:

	Plank	Scoba
Cash	$41,800	$22,000
Accounts Receivable	21,000	17,100
Inventory	14,900	8,100
Investment in Scoba Company	68,940	—0—
Land	52,800	47,000
Dividends Declared	9,900	7,760
Cost of Goods Sold	85,400	19,900
Other Expense	10,200	12,100
	$304,940	$133,960

Accounts Payable	$ 11,900	$ 6,000
Other Liabilities	4,900	4,000
Common Stock	101,500	54,300
Other Contributed Capital	19,600	5,000
Retained Earnings, 1/1	49,400	15,200
Sales	103,672	49,460
Equity in Subsidiary Income	13,968	—0—
	$304,940	$133,960

The accounts payable of Scoba Company include $2,900 payable to Plank Company.

(b) Prepare a consolidated statements workpaper at December 31, 2015. Any difference between book value and the value implied by the purchase price relates to subsidiary land. (List items that increase retained earnings first.)

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