Details of this Paper

On January 1, 20X4, Packard Company acquired

Description

solution


Question

Question;Question:On January 1, 20X4, Packard Company acquired an 80% interest in the common stockof Stackner Company for $350,000. Stackner had the following balance sheet on the dateof acquisition:StacknerCompanyBalance SheetJanuary1, 20X4Assets Liabilitiesand EquityAccountsreceivable........ $ 40,000 Accounts payable............. $ 42,297Inventory................. 20,000 Bonds payable............... 100,000Land..................... 35,000 Discount on bondspayable...... (2,297)Buildings................. 250,000 Common stock,$10 par........ 10,000Accumulated depreciation... (50,000) Paid-in capital in excess of par... 90,000Equipment................ 120,000Accumulated depreciation... (60,000) Retained earnings............. 115,000Total assets.............. $355,000 Total liabilities and equity..... $355,000Buildings (20-year life) are undervalued by $75,000. Equipment (?ve-year life) isundervalued by $60,000. Any remaining excess is considered to be goodwill.Refer to the preceding facts for Packard?s acquisition of 80% of Stackner?s com-mon stock. Packard uses the simple equity method to account for its investment in Stackner.On January 1, 20X5, Stackner held merchandise acquired from Packard for $15,000. During20X5, Packard sold $50,000 worth of merchandise to Stackner. Stackner held $20,000 of thismerchandise at December 31, 20X5. Stackner owed Packard $10,000 on December 31 as aresult of these intercompany sales. Packard has a gross pro?t rate of 30%.Stackner issued $100,000 of 8%, 10-year bonds for $96,719 on January 1, 20X1. Annualinterest is paid on December 31. Packard purchased the bonds on January 1, 20X5 for$100,930. Both companies use the straight-line method to amortize the premium/discount onthe bonds. Packard and Stackner used the following bond amortization schedules:Stackner PackardPeriod Cash Interest Balance Period Cash Interest BalanceJan.X1 $ 96,719 Jan.X1Jan.X2 $8,000 $8,328 97,047 Jan.X2Jan.X3 8,000 8,328 97,375 Jan.X3Jan.X4 8,000 8,328 97,703 Jan.X4Jan.X5 8,000 8,328 98,031 Jan.X5 $100,930Jan.X6 8,000 8,328 98,360 Jan.X6 $8,000 $7,845 100,775Jan.X7 8,000 8,328 98,688 Jan.X7 8,000 7,845 100,620Jan.X8 8,000 8,328 99,016 Jan.X8 8,000 7,845 100,465Jan.X9 8,000 8,328 99,344 Jan.X9 8,000 7,845 100,310Jan.Y0 8,000 8,328 99,672 Jan.Y0 8,000 7,845 100,155Jan.Y1 8,000 8,328 100,000 Jan.Y1 8,000 7,845 100,000Packard and Stackner had the following trial balances on December 31, 20X5:PackardCompany StacknerCompanyCash....................................................... 71,070 32,032Accounts Receivable........................................... 90,000 60,000Inventory.................................................... 100,000 30,000Land........................................................ 150,000 45,000Investment inStackner.......................................... 385,738Investment inStackner Bonds..................................... 100,775Buildings.................................................... 500,000 250,000Accumulated Depreciation...................................... (300,000) (70,000)Equipment................................................... 200,000 120,000Accumulated Depreciation...................................... (100,000) (84,000)Accounts Payable............................................. (55,000) (25,000)Bonds Payable................................................ (100,000)Discount onBonds Payable...................................... 1,640Common Stock............................................... (100,000) (10,000)Paid-In Capital in Excessof Par................................... (600,000) (90,000)RetainedEarnings, Jan. 1,20X5.................................. (400,000) (145,000)Sales....................................................... (600,000) (220,000)Cost ofGoods Sold............................................ 410,000 120,000Depreciation Expense?Buildings................................. 30,000 10,000Depreciation Expense?Equipment................................ 15,000 12,000Other Expenses............................................... 110,000 45,000Interest Revenue............................................... (7,845)Interest Expense............................................... 8,328Subsidiary Income............................................. (19,738)Dividends Declared............................................ 20,000 10,000Total...................................................... 0 0Prepare the worksheet necessary to produce the consolidated?nancial statements for Pack-ard Company and its subsidiary Stackner Company for the year ended December 31, 20X5.Include the determination and distribution of excess and income distribution schedules.

 

Paper#42068 | Written in 18-Jul-2015

Price : $29
SiteLock