the partial trial balances of p co and s co at december 31 year 5 were as follows ad 4376070

The partial trial balances of P Co. and S Co. at December 31, Year 5, were as follows: Additional Information • The investment in the shares of S Co. (a 90% interest) was acquired January 2, Year 1, for $90,000. At that time, the shareholders’ equity of S Co. was common shares of $60,000 and retained earnings of $20,000 and the common shares for P Co. of $150,000. • Net incomes of the two companies for the year were as follows: P Co. ….. $60,000 S Co. ….. 48,000 • During Year 5, sales of P Co. to S Co. were $10,000, and sales of S Co. to P Co. were $50,000. Rates of gross profit on intercompany sales in Years 4 and 5 were 40% of sales. • On December 31, Year 4, the inventory of P Co. included $7,000 of merchandise purchased from S Co., and the inventory of S Co. included $3,000 of merchandise purchased from P Co. On December 31, Year 5, the inventory of P Co. included $20,000 of merchandise purchased from S Co. and the inventory of S Co. included $5,000 of merchandise purchased from P Co. • During the year ended December 31, Year 5, P Co. paid dividends of $12,000 and S Co. paid dividends of $10,000. • At the time that P Co. purchased the shares of S Co., the acquisition differential was allocated to patents of S Co. These patents are being amortized for consolidation purposes over a period of five years. • In Year 3, land that originally cost $40,000 was sold by S Co. to P Co. for $50,000. The land is still owned by P Co. • Assume a corporate tax rate of 40%. Required: Prepare a consolidated statement of changes in equity for the year ended December 31, Year 5. View Solution:
The partial trial balances of P Co and S Co

Related Articles

armstrong helmet company 239138

Armstrong Helmet Company manufactures a unique model of bicycle helmet Question Case project Learning Objectives: Prepare practical applications of course concepts Develop analytical and critical thinking Develop decision-making capabilities Enhance professional...

read more
GET A FREE QUOTE





  
Open chat
Need help? We are Online 24/7
Hello 👋
Can we help you?