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Week4 HW - Exercise 6-7 Part A 2011(1 Sales 450,000...

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Exercise 6-7 Part A 20 11 (1) Sales 450,000 Purchases (Cost of Goods Sold) 450,000 To eliminate intercompany sales (2) Ending Inventory – Income Statement (CoGS) 25,000 12/31 Inventory (Balance Sheet) 25,000 To eliminate intercompany profit in ending inventory ($150,000 - 20 1 000 150 . , $ ) 20 12 (1) Sales 486,000 Purchases (Cost of Goods Sold) 486,000 To eliminate intercompany sales (2) Beginning Retained Earnings-Perkins 25,000 Beginning Inventory – Income Statement (CoGS) 25,000 To recognize intercompany profit included in beginning inventory and reduce beginning consolidated retained earnings for unrealized intercompany profit at the beginning of the year (3) Ending Inventory – Income Statement (CoGS) 27,000 12/31 Inventory (Balance Sheet) 27,000 To eliminate intercompany profit in ending inventory ($162,000 - 20 1 000 162 . , $ )
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Exercise 6-8 20 11 (1) Sales 450,000 Purchases (Cost of Goods Sold) 450,000 (2) Ending Inventory – Income Statement (CoGS) 25,000 12/31 Inventory (Balance Sheet) 25,000 To eliminate intercompany profit in ending inventory ($150,000 - $150,000/1.2) 20 12 (1) Sales 486,000 Purchases (Cost of Goods Sold) 486,000 To eliminate intercompany sales (2) 1/1 Retained Earnings-Perkins Company (85%)($25,000) 21,250 1/1 Noncontrolling Interest (15%)($25,000) 3,750 Beginning Inventory – Income Statement (CoGS) 25,000 To recognize intercompany profit in beginning inventory realized during the year and reduce controlling and noncontrolling interests for their share of unrealized intercompany profit at beginning of year. (3) Ending Inventory – Income Statement (CoGS) 27,000 12/31 Inventory (Balance Sheet) 27,000 To eliminate intercompany profit in ending inventory. ($162,000 - $162,000/1.2)
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Problem 6-9 PERRY COMPANY AND SUBSIDIARY Consolidated Statements Workpaper Part A For the Year Ended December 31, 2010 Perry Selby Eliminations Noncontrolling Consolidated Company Company Debit Credit Interest Balances Income Statement Sales $1,400,000 $800,000 (2) $310,000 $1,890,000 Dividend Income 20,000 (5) 20,000 Total Revenue 1,420,000 800,000 1,890,000 Cost of Goods Sold: Inventory, 1/1 230,000 145,000 (7) 25,000(4) 12,000 388,000 Purchases 900,000 380,000 (2) 310,000 970,000 Cost of Available for Sale 1,130,000 525,000 1,358,000 Inventory, 12/31 450,000 200,000 (3) 16,400 633,600 Cost of Goods Sold 680,000 325,000 724,400 Other Expense 250,000 195,000 (8) 15,000 460,000 Total Cost and Expense 930,000 520,000 1,184,400 Net/Consolidated Income 490,000 280,000 705,600 Noncontrolling Interest In Consolidated Income 50,400 * (50,400 ) Net Income to Retained Earnings $490,000 $280,000 $386,400 $322,000 $50,400 $655,200 Retained Earnings Statement 1/1 Retained Earnings: Perry Company $1,500,000 (4) $9,600 (1) $84,000 $1,542,400 (7) 20,000 (8) 12,000 Selby Company 480,000 (6) 480,000 Net Income from above 490,000 280,000 386,400 322,000 50,400 655,200 Dividends Declared Perry Company (50,000) (50,000) Selby Company (25,000) (5) 20,000 (5,000) 12/31/ Retained Earnings to Balance Sheet $1,940,000 $735,000 $908,000 $426,000 $45,400 $2,147,600 6-23
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* Noncontrolling interest in income = .2 × ($280,000 + $12,000 – $25,000 – $15,000) = $50,400 Perry Selby Eliminations Noncontrolling Consolidated Company Company Debit Credit Interest Balances Balance Sheet Cash $ 95,000 $ 70,000 $ 165,000 Accounts Receivable 302,000 90,000 392,000 Inventory 450,000 200,000 (3) 16,400 633,600 Investment in Selby Comp. 990,000 (1) 84,000 (6) 1,074,000 Difference between Implied & Book Value (6) 512,500 (7) 512,500 Plant and Equipment 850,000 585,000 (7) 150,000 (8) 30,000 1,555,000 Goodwill (7) 312,500 312,500 Other Assets 390,000 230,000 620,000 Total Assets $3,077,000 $1,175,000 $3,678,100 Accounts Payable $ 75,000 $ 30,000 $ 105,000 Other Liabilities 102,000 60,000 162,000 Common stock : Perry Company 960,000 960,000 Selby Company 350,000 (6) 350,000 Retained Earnings from above 1,940,000 735,000 908,000 426,000 45,400 2,147,600 1/1 Noncontrolling Interest in Net Assets (4) 2,400 (6) 268,500 258,100 (7) 5,000 12/31 Noncontrolling Interest in Net Assets (8) 3,000 $303,500 303,500 Total Liabilities and Equity
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