View the step-by-step solution to:

Red Company acquired 100% of White Company's common Stock on 01/01/2009. for $10,000 cash and issuing 10,000 shares of its $10 par value common stock...

Can you please review the attached for me? I am having trouble with the balance sheet consolidated totals.

Income statement Consolidation Consolidation RED WHITE Entries Totals INCOME STATEMENT DR CR Revenues (485,000) (190,000) (675,000) COGS 160,000 70,000 230,000 Depreciation expense 130,000 52,000 E 1,000 183,000 Amortization expense E 2,000 2,000 Equity in sub earnings (65,000) I 65,000 0.00 Net income (260,000) (68,000) (260,000) STATEMENT OF RE RE BOY (655,000) (98,000) S 98,000 (655,000) net income above (260,000) (68,000) (260,000) dividends 175,500 30,000 D 30,000 175,500 RE EOY (739,500) (136,000) (739,500) BALANCE SHEET CURRENT ASSETS 248,000 85,000 333,000 INVESTMENT IN SUB 231,000 0.00 D 30,000 S 158,000 0.00 A 113,000 I 65,000 LAND 427,500 58,000 485,500 B&E 713,000 161,000 713,000 E 1,000 SECRET FORMULA E 2,000 2,000 GOODWILL A 10,000 10,000 TOTAL ASSETS 1,619,500 304,000 1,543,500 DIFFERENCE (76,000) CURRENT LIAB (110,000) (19,000) A 19,000 (110,000) LONG-TERM LIAB (80,000) (84,000) A 84,000 (80,000) COMM STOCK (600,000) (60,000) S 60,000 (600,000) APIC (90,000) (5,000) (90,000) RET EARNINGS EOY ABOVE (739,500) (136,000) (739,500) TOTAL LIAB AND EQUIT (1,619,500) (304,000) 369,000 369,000 (1,619,500) 1- PREP AN ALLOCATION OF ACQUISITION PRICE SCHEDULE 2-PREP THE CONSOLIDATING JE FOR 12/31/13 3-PREP A CONSOLIDATING EXCEL WORKSHEET AS OF 12/31/13 DETERMINATION OF CONSOLIDATION TOTALS Red Company acquired 100% of White Company's common Stock on 01/01/2009. for $10,000 cash and issuing 10,000 shares of its $10 par value common stock (having a fv of $14.00 per share). As of that date, white had stockholders' equity totaling $105,000. land shown on white's accounting records was undervalued by $10,000. equipment (with a 5 year life) was undervalued by $5,000. A secret formula (un-booked) developed by white was appraised at $20,000 with an estimated life of 10 years. the remaining net assets of white at 01/01/09 were on the books at values which approximated fair values. Red applies equity method of accounting for its investment in white. following are the separate financial statements for the two companies for the year ending 12/31/13. credit balances are indicated by parentheses;
Background image of page 1
DANA RODRIGUEZ CONSOLIDATED ENTRY S COMMON STOCK (WHITE) 60,000 RE 1/1/13 98,000 INVESTMENT IN WHITE (100%) 158,000 To eliminate beg stockholders' equity accounts of subs along with BV portion of investment. CONSOLIDATION ENTRY A LIABILITY 103,000 GOODWILL 10,000 INVESTMENT IN WHITE (100%) 113,000 To recognize Goodwill and unamortized excess fv as of Jan 1, 2013, to White's assets acquired an liab assumed in the combination. CONSOLIDATION ENTRY I EQUITY IN WHITE CO 65,000 INVESTMENT IN WHITE (100%) 65,000 TO ELIMINATE INTRA-ENTITY INCOME ACCRUAL COMPRISING WHITE INCOME LESS EXCESS ACQUISITION-DATE FAIR VALUE AMORTIZE. CONSOLIDATION ENTRY D INVESTMENT IN WHITE (100%) 30,000 DIVIDENDS PAID 30,000 To eliminate intra entity dividend payments. CONSOLIDATION ENTRY E DEPRECIATION EXPENSE 1,000 AMORTIZATION EXPENSE 2,000 EQUIPMENT 1,000 FORMULA 2,000 To recognize the current income effect from excess acquisition date fv allocations over their expected remaining lives Equipment (undervalued) 5,000 5 1,000 Formula 20,000 10 2,000
Background image of page 2
Show entire document
Sign up to view the entire interaction

Top Answer

Dear Student Please find... View the full answer

Accounting-8219465.xls

Red Company acquired 100% of White Company's common Stock on 01/01/2009. for $10,000 cash
and issuing 10,000 shares of its $10 par value common stock (having a fv of $14.00 per share). As of
that...

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online