Tomasco and Wooten Companies had the following balance sheets at December 31, 20
ID: 2519858 • Letter: T
Question
Tomasco and Wooten Companies had the following balance sheets at December 31, 20X8 ($ in thousands): Tomasco Wooten $ 600 1.700 $2.300 $100 400 $500 Assets Cash Net plant Total assets Liabilities and stockholders' equity Accounts payable Long-term debt Stockholders' equity Total liabilities and stockholders' equity 275 425 1.600 $2,300 $ 80 195 225 $500 On January 1, 20X9, Tomasco purchased 100% of the common stock of Wooten for $225,000. 1. Prepare a balance sheet for Tomasco Company immediately after its purchase of Wooten Company. 2. Prepare a balance sheet for the consolidated entity immediately after the purchase of Wooten Company. 3. Suppose Tomasco Company had net income of $250,000 in 20X9 (before recognizing its share of Wooten's income) and Wooten Company had net income of $45,000 in 20X9. Neither company sold items to the other. What was the 20X9 consolidated net income?Explanation / Answer
Balance sheet as at Dec 31, 2018 ($ in thousands)
2. Consolidated Balance sheet of Tomasco as at Dec 31, 2018 ($ in thousands)
3. As the company has invested 100% equity in the Wooten company therefore the total consolidated income Tomasco co. will be $250,000 + $45,000 = $295,000
Particulars Tomasco Assets Cash 375 Net Plant 1700 Investment in Wooten 225 Total Assets 2300 Liabilities and Stockholders Equity Accounts payable 275 Long term debt 425 Stockholders Equity 1600 Total Liabilities and Stockholders equity 2300