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During 2018, Pavin begins to sell merchandise to Stabler. During that year, inventory costing $90,000 was transferred at a price of $120,000.

During 2018, Pavin begins to sell merchandise to Stabler. During that year, inventory costing $90,000 was transferred at a price of $120,000. All but $20,000 (at sales price) of these goods were resold to outside parties by year-end. Stabler still owes $43,000 for inventory shipped from Pavin during December.

 

The following financial figures are for the two companies for the year ending December 31, 2018. Dividends were both declared and paid during the current year.

 

  Pavin  Stabler

Revenues $(770,000)  $(525,000)

Cost of goods sold  465,000    250,000 

Expenses  135,000    168,500 

Interest expense—bonds  46,000    0 

Interest income—bond investment  0    (17,500)

Loss on extinguishment of bonds  0    0 

Equity in Stabler's income  (124,000)   0 

Net income $(248,000)  $(124,000)

Retained earnings, 1/1/18 $(355,000)  $(381,000)

Net income  (248,000)   (124,000)

Dividends paid  165,000    87,000 

Retained earnings, 12/31/18 $(438,000)  $(418,000)

Cash and receivables $227,000   $45,000

 Inventory  185,000    97,000

 Investment in Stabler  638,000    0

 Investment in Pavin bonds  0    197,500 

Land, buildings, and equipment (net)  255,000    551,000 

Trademarks  0    0 

Total assets $1,305,000   $890,500 

Accounts payable $(158,000)  $(232,500)

Bonds payable  (400,000)   (110,000)

Discount on bonds  10,000    0

 Common stock  (319,000)   (130,000)

Retained earnings (above)  (438,000)   (418,000)

Total liabilities and stockholders' equity $(1,305,000)  $(890,500)

Note: Credits are indicated by parentheses. 

 

Prepare a worksheet to produce consolidated balances. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Consolidated Totals column should be entered with a minus sign.)

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