Place Company purchased 92% of the common stock of Shaw, Inc. on January 1, 2012
ID: 2404382 • Letter: P
Question
Place Company purchased 92% of the common stock of Shaw, Inc. on January 1, 2012, for $402,800. Trial balances at the end of 2012 for the companies were:
Place
Shaw
Cash
$80,400
$86,400
Accounts and Notes Receivable
200,600
206,900
Inventory, 1/1
70,400
49,000
Investment in Shaw, Inc.
402,800
—0—
Plant Assets
295,800
197,400
Dividends Declared
34,900
21,700
Purchases
238,100
149,200
Selling Expenses
27,700
20,000
Other Expenses
15,300
12,800
$1,366,000
$743,400
Accounts and Notes Payable
$97,800
$37,700
Other Liabilities
45,600
15,100
Common Stock, $10 par
149,200
98,900
Other Contributed Captital
278,600
148,900
Retained Earnings, 1/1
227,100
169,800
Sales
547,736
273,000
Dividend Income
19,964
—0—
$1,366,000
$743,400
Inventory balances on December 31, 2012, were $24,500 for Place and $15,200 for Shaw, Inc. Shaw’s accounts and notes payable contain a $14,700 note payable to Place.
Prepare a workpaper for the preparation of consolidated financial statements on December 31, 2012. The difference between book value of equity acquired and the value implied by the purchase price relates to subsidiary land, which is included in plant assets.
Place
Shaw
Cash
$80,400
$86,400
Accounts and Notes Receivable
200,600
206,900
Inventory, 1/1
70,400
49,000
Investment in Shaw, Inc.
402,800
—0—
Plant Assets
295,800
197,400
Dividends Declared
34,900
21,700
Purchases
238,100
149,200
Selling Expenses
27,700
20,000
Other Expenses
15,300
12,800
$1,366,000
$743,400
Accounts and Notes Payable
$97,800
$37,700
Other Liabilities
45,600
15,100
Common Stock, $10 par
149,200
98,900
Other Contributed Captital
278,600
148,900
Retained Earnings, 1/1
227,100
169,800
Sales
547,736
273,000
Dividend Income
19,964
—0—
$1,366,000
$743,400
Explanation / Answer
The workpaper is prepared as below:
_____
Notes:
Work Paper Place Co. Shaw Inc. Debit Credit Noncontrolling Interest Consolidated Balances Income Statement Sales 547,736 273,000 820,736 Dividend Income (21,700*.92) 19,964 1) 19,964 0 Total Revenue 567,700 273,000 820,736 Cost of Goods Sold: Inventory, 1/1 70,400 49,000 119,400 Purchases 238,100 149,200 387,300 Cost of Goods Available for Sale 308,500 198,200 506,700 Inventory, 12/31 24,500 15,200 39,700 Cost of Goods Sold 284,000 183,000 467,000 Selling Expenses 27,700 20,000 47,700 Other Expenses 15,300 12,800 28,100 Total Cost and Expense 327,000 215,800 542,800 Net Consolidated Income 240,700 57,200 277,936 Non Controlling Interest in Consolidated Income (57,200*.08) 4,576 -4,576 Net Income Transferred to Retained Earnings $240,700 $57,200 $19,964 $4,576 $273,360 Retained Earnings 1/1, Retained Earnings Place Company 227,100 227,100 Shaw Inc. 169,800 2) 169,800 0 Net Income from Above 240,700 57,200 19,964 4,576 273,360 Dividends Declared 0 Place Company -34,900 1) 19,964 -34,900 Shaw Inc. -21,700 -1,736 0 12/31, Retained Earnings Transferred to Balance Sheet $432,900 $205,300 $189,764 1) $19,964 $2,840 $465,560 Balance Sheet Cash 80,400 86,400 166,800 Accounts and Notes Receivable 200,600 206,900 4) 14,700 392,800 Inventory 24,500 15,200 39,700 Investment in Shaw Co. 402,800 2) 402,800 Difference between Implied and Book Value 2) 20,226 3) 20,226 Plant Assets 295,800 197,400 3) 20,226 513,426 Total $1,004,100 $505,900 $1,112,726 Accounts and Notes Payable 97,800 37,700 4) 14,700 120,800 Other Liabilities 45,600 15,100 60,700 Common Stock Place Company 149,200 149200 Shaw Inc. 98,900 2) 98,900 Other Contributed Capital Place Company 278,600 278,600 Shaw Inc. 148,900 2) 148,900 Retained Earnings from Above 432,900 205,300 189,764 19,964 2,840 465,560 1/1, Noncontrolling Interest 2) 35,026 35,026 12/31, Noncontrolling Interest 37866 37,866 Total $1,004,100 $505,900 $492,716 $492,716 $1,112,726