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I don't know how to make this exercise;Consolidated working papers (downstream sales);Pan Corporation acquired 100% of Sal Corporation's oustanding votiong common stock on Jan 1, 2009, for \$660,000 cash. Sal's stockholders' equity on this date consisted on \$300,000 capital stock and \$300,000 retained earnings. The difference between the price paid by Pan Corporation and the underlying equity aquired in Sal Corporation was allocated \$30,000 to Sal's undervalued inventory and the remainder to goodwill(which is not amortized). The undervalued inventory items were sold by Sal during 2009.;Pan made sales of \$100,000 to Sal at a gross profit of \$40,000 during 2009, during 2010, Pan made sales of \$120,000 to Sal at a gross profit of \$48,000. One-half the 2009 sales were invetoried by Sal at year-end 2009, and one-fourth of the 2010 sales were inventoried by Sal at year-end 2010. Sal owed Pan \$17,000 on account at December 21, 2010.;The separate financial statements of Pan and Sal Corporations at and for the year ended December 31, 2010, are summarized as follows;Combined Income and Retained Earning Statements;for the year ended December 31, 2010 (in thousands);Sales;Pan:\$800 Sal:\$400;Income from Sal;Pan: \$108 Sal:\$-;Cost of Sales;Pan:\$(400) Sal: \$(200);Depreciation Expense;Pan: \$(110) Sal: \$(40);Other Expenses;Pan: \$(192) Sal: \$(60);Net Income;Pan: \$206 Sal: \$100;Beginning Retained Earnings;Pan: \$606 Sal: \$380;Less: Dividends;Pan: \$(100) Sal: \$(50);Retained Earnings December 31, 2010;Pan: \$712 Sal: \$430;Balance Sheet at December 31, 2010;Cash;Pan: \$54 Sal: \$37;Receivables-net;Pan: \$90 Sal: \$60;Inventories;Pan: \$100 Sal: \$80;Other Assets;Pan: \$70 Sal: \$90;Land;Pan: \$50 Sal: \$50;Buildings-net;Pan: \$200 Sal: \$150;Equipment-net;Pan: \$500 Sal: \$400;Investment in Sal;Pan: \$748 Sal: \$-;Total assets;Pan: \$1,812 Sal: \$867;Account Payable;Pan: \$160 Sal: \$47;Other Liabilities;Pan: \$340 Sal: \$90;Common Stock, \$10 par;Pan: \$600 Sal: \$300;Retained Earnings;Pan: \$712 Sal: \$430;Total Equities;Pan: \$1,812 Sal: \$867;Requiered: Prepare working papers to consolidate the financial statements of Pan Corporation and Subsidiary at and for the year ended December 31, 2010

Paper#25866 | Written in 18-Jul-2015

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