ADVANCED FINANCIAL ACCT.(LL) >CUSTOM<
ADVANCED FINANCIAL ACCT.(LL) >CUSTOM<
12th Edition
ISBN: 9781260824292
Author: Christensen
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 3, Problem 3.26P

a.

To determine

Introduction: Journal entries is a systematic method of recording transactions as and when they occur. It is a summary of transactions divided into the debit and credit items that are recorded chronologically. It is an act of keeping and recoding all the transactions occurring in the business.

The journal entry on P’s book in acquisition.

a.

Expert Solution
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Explanation of Solution

Recording the initial investment in S’ books.

    ParticularAmount
      $
    Amount
      $
    Investment in S Dr.270,000
    Cash Cr.270,000

b.

To determine

Introduction: Consolidated balance sheets and worksheets are the tools that are used to calculate the retained earnings and the dividends produce by the subsidiaries towards its parent company.

The consolidate worksheet of the final values by the P’s book.

b.

Expert Solution
Check Mark

Explanation of Solution

Consolidated worksheet:

    Book value
    NC 10%+P=Common stock=Retained earnings
    Original book value30,000270,000200,000100,000
    Balance sheetP’sS’sElimination
    DR
    Elimination
    CR
    consolidated
    Cash55,00020,00075,000
    Amount received50,00030,00080,000
    Inventory100,00060,000160,000
    Investment in S270,000270,0000
    Land 225,000100,000325,000
    Building and equipment700,000200,00010000890,000
    Accumulated depreciation(400,000)(10,000)10000(400,000)
    Total assets1,000,000400,00010,000280,0001,130,000
    Account payable75,00025,000100,000
    Bonds200,00075,000275,000
    Common stock 500000500000200000200000500000
    Retain earning 225000100000100000225000
    NCI in NA of S30,00030,000
    Total liabilities1,000,000400,000300,00030,0001,130,000

c.

To determine

Concept Introduction:

Consolidated financial statements are financial statement maintained by entity with multiple subsidiary and division.

To Prepare:

The Consolidated balance sheet immediately following the acquisition.

c.

Expert Solution
Check Mark

Explanation of Solution

The Consolidated balance sheet immediately following the acquisition is as follows:

    P and S
    Consolidated Balance sheet
    ParticularsAmountAmount
    Cash $75,000
    Accounts Receivable$80,000
    Inventory$160,000
    Land$325,000
    Building and Equipment$890,000
    Less: Accumulated Depreciation($400,000)$490,000
    Total assets$1,130,000
    Accounts Payable$100,000
    Bonds Payable$275,000
    Common Stock$500,000
    Retained earnings$225,000
    Non-controlling interest$30,000
    Total liabilities and stock holders’ equity$1,130,000

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Chapter 3 Solutions

ADVANCED FINANCIAL ACCT.(LL) >CUSTOM<

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