(a) Prepare a consolidated financial statements workpaper for the year ended Dec
ID: 2511024 • Letter: #
Question
(a)
Prepare a consolidated financial statements workpaper for the year ended December 31, 2016. (Round answers to 0 decimal places, e.g. 5,125. List items that increase retained earnings first.)
Parsons Company acquired 90% of the outstanding common stock of Shea Company on June 30, 2014, for $428,900. On that date, Shea Company had retained earnings in the amount of $60,100, and the fair value of its recorded assets and liabilities was equal to their book value. The excess of implied over the fair value of the recorded net assets was attributed to an unrecorded manufacturing formula held by Shea Company, which had an expected remaining useful life of five years from June 30, 2014.Financial data for 2016 are presented here:
Parsons Company Shea Company Sales $2,551,500 $1,129,200 Dividend Income 54,450 Total Revenue 2,605,950 1,129,200 Cost of Goods Sold 1,733,600 696,100 Expenses 656,200 250,400 Total Cost and Expense 2,389,800 946,500 Net Income $216,150 $182,700 1/1 Retained Earnings $591,300 $138,300 Net Income 216,150 182,700 Dividends Declared (99,700 ) (60,500 ) 12/31 Retained Earnings $707,750 $260,500 Cash $118,500 $133,400 Accounts Receivable 339,200 123,900 Inventory 364,800 200,400 Other Current Assets 40,800 13,100 Land 148,600 Investment in Shea Company 428,900 Property and Equipment 830,500 238,900 Accumulated Depreciation (205,400 ) (53,500 ) Total Assets $2,065,900 $656,200 Accounts Payable $308,150 $24,500 Other Liabilities 42,600 18,900 Common Stock 1,007,400 302,400 Additional Paid-in Capital 49,900 Retained Earnings 707,750 260,500 Total Liabilities and Equity $2,065,900 $656,200
On December 31, 2014, Parsons Company sold equipment (with an original cost of $99,100 and accumulated depreciation of $49,550) to Shea Company for $96,500. This equipment has since been depreciated at an annual rate of 20% of the purchase price. During 2015 Shea Company sold land to Parsons Company at a profit of $15,200.
The inventory of Parsons Company on December 31, 2015, included goods purchased from Shea Company on which Shea Company recognized a profit of $7,400. During 2016, Shea Company sold goods to Parsons Company for $375,000, of which $60,500 was unpaid on December 31, 2016. The December 31, 2016, inventory of Parsons Company included goods acquired from Shea Company on which Shea Company recognized a profit of $10,400.
Explanation / Answer
Consolidated Financial Statement:
Income Statement: ($)
Sales 3680700
Dividend 54450
Total Income 3735150
Cost of Good Sold (2429700)
Expenses (906600)
Net Income 398850
Retained Earning 769600
Dividend Declared (160200)
Net Income 968250
Balance Sheet
Liabilities
Accumulated depreciation 258900
Accounts Payable 332650
Other Liabilities 61500
Common Stock 1309800
Additional paid in capital 49900
Retained Earning 968250
Total 2981000
Assets
cash 251900
Accounts Receivable 463100
Inventory 565200
Other Current Assets 53900
Land 148600
Investment 428900
Property & Equipment 1069400
Total 2981000
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