Intercompany Bond Holdings at par 90% owned Subsidiary Balance sheets for P Comp
ID: 2507904 • Letter: I
Question
Intercompany Bond Holdings at par 90% owned SubsidiaryBalance sheets for P Company and S Company on August 1, 2011, are as follows.
THE BALANCE SHEET WAS DONE, SO PLEASE DO THE ELIMINATIONS ON THE SECOND PAGE
P. Company S Company
Cash
$165,500
106,000
Receivables
366,000
126,000
Inventory
261,000
108,000
Investment in Bond
306,000
-0-
Investment in S Company stock
586,500
- 0 -
Plant and Equipment (net)
573,000
320,000
Land
200,000
$300,000
Total
2,458,000
$960,000
Account payable
$174,000
$58,000
Accrued Expenses
32,400
26,000
Bonds payable 8%
- 0-
200,000
Common stock
1,500,000
460,000
Other Contributed capital
260,000
60,000
Retained
491,600
156,000
TOTAL
$2,458,000
$960,000
REQUIRED
Prepare a work paper for consolidated balance for P Company and its Subsidiary on August 1, 2011 taking into consideration the following. P Company acquired 90% of the outstanding common stock of S company on August 1, 2011 for cash payment of $586,500.
Included in the investment in Bonds account is $40,000 par value of S Company bonds payable that
were purchased at par by P Company in 2002. The bonds pay interest on April 30, and October 31.
S Company has appropriately accrued interest expense on August 1, 2011; P Company, however;
P COMPANY AND SUBSIDIARY Consolidated Balance Sheet Workpaper August 1, 2011
P
S
Eliminations
Noncontrolling
Consolidated
Company
Company
Dr.
Cr.
Interest
Balance Cash 165,500
106,000
Receivables 366,000
126,000
Inventory 261,000
108,000
Investment in Bonds 306,000
Investment in S Company Stock 586,500
Plant and Equipment 573,000
320,000
Land 200,000
300,000
Total 2,458,000
960,000
Accounts Payable 174,000
58,000
Accrued Expenses 32,400
26,000
Bonds Payable, 8%
200,000
Common Stock:
P Company 1,500,000
S Company
460,000
Other Contributed Capital:
P Company 260,000
S Company
60,000
Retained Earnings:
P Company 491,600
S Company
156,000
Noncontrolling Interest
Total 2,458,000
960,000
Journal entry descriptions
Intercompany Bond Holdings at par 90% owned Subsidiary
Balance sheets for P Company and S Company on August 1, 2011, are as follows.
THE BALANCE SHEET WAS DONE, SO PLEASE DO THE ELIMINATIONS ON THE SECOND PAGE
P. Company S Company
Cash
$165,500
106,000
Receivables
366,000
126,000
Inventory
261,000
108,000
Investment in Bond
306,000
-0-
Investment in S Company stock
586,500
- 0 -
Plant and Equipment (net)
573,000
320,000
Land
200,000
$300,000
Total
2,458,000
$960,000
Account payable
$174,000
$58,000
Accrued Expenses
32,400
26,000
Bonds payable 8%
- 0-
200,000
Common stock
1,500,000
460,000
Other Contributed capital
260,000
60,000
Retained
491,600
156,000
TOTAL
$2,458,000
$960,000
REQUIRED
Prepare a work paper for consolidated balance for P Company and its Subsidiary on August 1, 2011 taking into consideration the following. P Company acquired 90% of the outstanding common stock of S company on August 1, 2011 for cash payment of $586,500.
Included in the investment in Bonds account is $40,000 par value of S Company bonds payable that
were purchased at par by P Company in 2002. The bonds pay interest on April 30, and October 31.
S Company has appropriately accrued interest expense on August 1, 2011; P Company, however;
P COMPANY AND SUBSIDIARY Consolidated Balance Sheet Workpaper August 1, 2011
P
S
Eliminations
Noncontrolling
Consolidated
Company
Company
Dr.
Cr.
Interest
Balance Cash 165,500
106,000
Receivables 366,000
126,000
Inventory 261,000
108,000
Investment in Bonds 306,000
Investment in S Company Stock 586,500
Plant and Equipment 573,000
320,000
Land 200,000
300,000
Total 2,458,000
960,000
Accounts Payable 174,000
58,000
Accrued Expenses 32,400
26,000
Bonds Payable, 8%
200,000
Common Stock:
P Company 1,500,000
S Company
460,000
Other Contributed Capital:
P Company 260,000
S Company
60,000
Retained Earnings:
P Company 491,600
S Company
156,000
Noncontrolling Interest
Total 2,458,000
960,000
Journal entry descriptions
Intercompany Bond Holdings at par 90% owned Subsidiary
Explanation / Answer
Consolidated Balance sheet as on August 11, 2011 Liability Amount Asset Amount Common stock(1500000+460000) 1960000 Plant & equipment(573000+320000) 893000 Contributed capital(260000+60000) 320000 Land(200000+960000) 1160000 Retained earnings(461600+156000) 617600 Inventory(61000+108000) 169000 Account payable(174000+58000) 232000 Receivable(366000+126000) 492000 Accrued expenses(32400+26000) 58400 Investment in bond 306000 Bonds payable 418500 Investmnent in S company 586500 Total 3606500 3606500
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