Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Question
Chapter 2, Problem 2.27BP
a.
To determine
Concept introduction
The consolidated balance sheet and the worksheets are the computed tools that are used to calculate the
To prepare: A
a.
Expert Solution
Answer to Problem 2.27BP
The journal entry so passed gives a debit of investment and credit the cash with the same amount.
Explanation of Solution
| Particular | Debit | Credit |
| Cost method entry on books | ||
| Investment in S co. | ||
| Cash | ||
| The initial investment in S co. income | ||
| Cash | ||
| Investment in the S co. | ||
| Record P co. share in S co. dividend | ||
| Total |
B.
To determine
Concept introduction
The consolidated balance sheet and the worksheets are the computed tools that are used to calculate the retained earnings and the dividend produced by the subsidiaries towards its parent company.
To prepare: the consolidated worksheet for the final values
B.
Expert Solution
Answer to Problem 2.27BP
The consolidated worksheet is prepared and discussed.
Explanation of Solution
| Book value calculation | |||||
| Total book value | = | Common stock | + | Retained earnings | |
| Initial book value |
| Income statement | P | S | Dr. | Cr. | consolidated |
| Sales | |||||
| Less Cogs | |||||
| Depreciation Exp | |||||
| Sel. Exp | |||||
| Income from S | |||||
| Net income |
| Statement of Retain Earning | P | S | Dr. | Cr. | Consolidated |
| Opening balance | |||||
| Net income | |||||
| Less dividend declared | |||||
| End balance |
| Income statement | P co | S co | Eliminated DR | Eliminated CR | consolidated |
| Cash | |||||
| Accounts received | |||||
| Inventory | |||||
| Investment in S co | |||||
| Land | |||||
| Building and equipment | |||||
| Less accumulated depreciation | |||||
| Total assets | |||||
| Account payable | |||||
| Bonds | |||||
| Common stocks | |||||
| Retained earnings | |||||
| Total liabilities |
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Chapter 2 Solutions
Advanced Financial Accounting
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