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Paulee Corporation paid $24,800 for an 80% interest in Sergio Corporation on January 1, 2013, at which time Sergio's stockholders' equity consisted of $15,000 of Common Stock and $6,000 of Retained Earnings. The fair values of Sergio Corporation's assets and liabilities were identical to recorded book values when Paulee acquired its 80% interest.   Sergio Corporation reported net income of $4,000 and paid dividends of $2,000 during 2013.   Paulee Corporation sold inventory items to Sergio during 2013 and 2014 as follows:                                                                                 2013                    2014 Paulee's sales to Sergio                                   $5,000                 $6,000 Paulee's cost of sales to Sergio                        3,000                   3,500 Unrealized profit at year-end                          1,000                   1,500   At December 31, 2014, the accounts payable of Sergio include $1,500 owed to Paulee for inventory purchases.   Required:   Financial statements of Paulee and Sergio appear in the first two columns of the partially completed working papers. Complete the consolidation working papers for Paulee Corporation and Subsidiary for the year ended December 31, 2014.

Paulee Corporation paid $24,800 for an 80% interest in Sergio Corporation on January 1, 2013, at which time Sergio's stockholders' equity consisted of $15,000 of Common Stock and $6,000 of Retained Earnings. The fair values of Sergio Corporation's assets and liabilities were identical to recorded book values when Paulee acquired its 80% interest.   Sergio Corporation reported net income of $4,000 and paid dividends of $2,000 during 2013.   Paulee Corporation sold inventory items to Sergio during 2013 and 2014 as follows:                                                                                 2013                    2014 Paulee's sales to Sergio                                   $5,000                 $6,000 Paulee's cost of sales to Sergio                        3,000                   3,500 Unrealized profit at year-end                          1,000                   1,500   At December 31, 2014, the accounts payable of Sergio include $1,500 owed to Paulee for inventory purchases.   Required:   Financial statements of Paulee and Sergio appear in the first two columns of the partially completed working papers. Complete the consolidation working papers for Paulee Corporation and Subsidiary for the year ended December 31, 2014.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter12: Balanced Scorecard And Other Performance Measures
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. Paulee Corporation paid $24,800 for an 80% interest in Sergio Corporation on January 1, 2013, at which time Sergio's stockholders' equity consisted of $15,000 of Common Stock and $6,000 of Retained Earnings. The fair values of Sergio Corporation's assets and liabilities were identical to recorded book values when Paulee acquired its 80% interest.

 

Sergio Corporation reported net income of $4,000 and paid dividends of $2,000 during 2013.

 

Paulee Corporation sold inventory items to Sergio during 2013 and 2014 as follows:

 

                                                                              2013                    2014

Paulee's sales to Sergio                                   $5,000                 $6,000

Paulee's cost of sales to Sergio                        3,000                   3,500

Unrealized profit at year-end                          1,000                   1,500

 

At December 31, 2014, the accounts payable of Sergio include $1,500 owed to Paulee for inventory purchases.

 

Required:

 

Financial statements of Paulee and Sergio appear in the first two columns of the partially completed working papers. Complete the consolidation working papers for Paulee Corporation and Subsidiary for the year ended December 31, 2014.

 

Eliminations Paulee Sergio Debit Credit Consolidated INCOME STATEMENT Sales Invest. income from Sergio $ 43,000 $20,000 6,700 ( 22,000) ( 12,200) ( 8,000) ( 3,000) Cost of Sales lother expenses Noncontrolling interest share $ 15,500 $ 9,000 Net income Retained Earnings 1/1 Add: Net income Less: Dividends Retained Earnings 12/31 $ 8,000 9,000 ( 5,000) $ 9,000 15,500 ( 10,000) $ 14,500 $12,000 BALANCE SHEET Cash Net Receivables Dividend Receivable Inventories Goodwill Plant assets-net $ 5,400 14,000 $ 3,000 10,000 2,000 18,000 ৪, 000 24,000 31,000 Investment in Sergio TOTAL ASSETS 28,100 $ 91,500 $52,000 LIAB. & EQUITY Accounts payable $ 17,500 Dividend payable Jother debt $12,500 7,000 2,500 12,500 10,000 Capital stock Retained Earnings 1/1 Noncntrl. Interest 12/31 Noncntrl. Interest 40,000 15,000 14,500 12,000 $ 91,500 $52,000 TOTAL LIAB. & EQUITY
Transcribed Image Text:Eliminations Paulee Sergio Debit Credit Consolidated INCOME STATEMENT Sales Invest. income from Sergio $ 43,000 $20,000 6,700 ( 22,000) ( 12,200) ( 8,000) ( 3,000) Cost of Sales lother expenses Noncontrolling interest share $ 15,500 $ 9,000 Net income Retained Earnings 1/1 Add: Net income Less: Dividends Retained Earnings 12/31 $ 8,000 9,000 ( 5,000) $ 9,000 15,500 ( 10,000) $ 14,500 $12,000 BALANCE SHEET Cash Net Receivables Dividend Receivable Inventories Goodwill Plant assets-net $ 5,400 14,000 $ 3,000 10,000 2,000 18,000 ৪, 000 24,000 31,000 Investment in Sergio TOTAL ASSETS 28,100 $ 91,500 $52,000 LIAB. & EQUITY Accounts payable $ 17,500 Dividend payable Jother debt $12,500 7,000 2,500 12,500 10,000 Capital stock Retained Earnings 1/1 Noncntrl. Interest 12/31 Noncntrl. Interest 40,000 15,000 14,500 12,000 $ 91,500 $52,000 TOTAL LIAB. & EQUITY
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