a. What consolidation worksheet adjustments would have been required as of Janua

Question

a. What consolidation worksheet adjustments would have been required as of January 1, 2012, to eliminate the subsidiary’s common and preferred stocks?

b. What consolidation worksheet adjustments would have been required as of December 31, 2012, to account for Mona’s purchase of Lisa’s bonds?

c. What consolidation worksheet adjustments would have been required as of December 31, 2012, to account for the intra-entity sale of fixed assets?

d. Assume that consolidated financial statements are being prepared for the year ending December 31, 2013. Calculate the consolidated balance for each of the following accounts:

Franchises

Fixed Assets

Accumulated Depreciation

Expenses

Mona, Inc. isa Company $ (500,000) (200,000) 120,000 Sales and other revenues Expenses Dividend income-Lisa common stock Dividend income-Lisa preferred stock 220,000 (8,000) (4,800) Retained earnings, 1/1/13 Net income (above) Dividends paid-common stock Dividends paid-preferred stock $ (292,800) $ (80,000) $ (700,000) $(500,000) (80,000) 10,000 8,000 $ (900,000) (562,000) (292,800) 92,800 Retained earnings, 12/31/13 Mona, Inc. Lisa Company $ 130,419 $ 500,000 552,800 65,000 51,781 1,100,000 (300,000) Investment in Lisa-common stock Investment in Lisapreferred stook Investment in Lisa-bonds 800,000 (200,000) 1,600,000 1,100,000 $ (400,000) (144,580) (100,000) 6,580 (200,000) (100,000) (562,000) $(1,600,000 $(1,100,000) Accumulated depreciation Accounts payable Bonds payable Discount on bonds payable . . .. Common stock.. _ _ _ _ . . . _ _ _ _ . . . _ _ _ . . . . _ _ . . . (300,000) Retained earnings, 12/31/13 (900,000) Total liabilities and equities . . _ _ _ _ . . . _ _ _ . . . _ _.

Explanation / Answer

a) Account Debit Credit Workings Common stock       160,000 200000*80% Retained earnings       392,800 Investment in lisa- common stock          552,800 Preferred stock          60,000 (100000*60%) Retained earnings            5,000 Investment in lisa- Preferred stock            65,000 b) bonds payable          51,781 Investment in lisa- Bonds            51,781 c) profit on sale of fixed asset          20,000 retained earnings            20,000 d) Fixed Assets    1,900,000 Accumulated Depreciation       500,000 Expenses       340,000

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