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problem 8-6 (LO 4) Worksheet, direct and indirect holding, intercompany mer-;chandise, machine. The following diagram depicts the relationships among Mary;Company, John Company, and Joan Company on December 31, 2014;Mary John;Owns 60% Owns 40%;Joan;Owns 50%;Mary Company purchases its interest in John Company on January 1, 2012, for $204,000.;John Company purchases its interest in Joan Company on January 1, 2013, for $75,000. Mary;Company purchases its interest in Joan Company on January 1, 2014, for $72,000. All invest-;ments are accounted for under the equity method. Control over Joan Company does not occur;until the January 1, 2014, acquisition. Thus, a D&D schedule will be prepared for the invest-;ment in Joan as of January 1, 2014.;The following stockholders? equities are available;John Joan;Company;December31, December 31;2011 2012 2013;Commonstock ($10par)........................ $150,000;Commonstock ($10par)........................ $100,000 $100,000;Paid-incapitalinexcess of par.................. 75,000;Retained earnings............................. 75,000 50,000 80,000;Totalequity................................ $300,000 $150,000 $180,000;On January 2, 2014, Joan Company sells a machine to Mary Company for $20,000. The;machine has a book value of $10,000, with an estimated life of?ve years and is being depre-;ciated on a straight-line basis.;John Company sells $20,000 of merchandise to Joan Company during 2014 to realize a gross;pro?t of 30%. Of this merchandise, $5,000 remains in Joan Company?s December 31, 2014;inventory. Joan owes John $3,000 on December 31, 2014, for merchandise delivered during;2014.;Trial balances of the three companies prepared from general ledger account balances on December 31, 2014, are as follows;Mary John Joan;Cash....................................... 62,500 60,000 30,000;Accounts Receivable........................... 200,000 55,000 30,000;Inventory.................................... 360,000 80,000 50,000;Investmentin JohnCompany................... 270,000;Investmentin JoanCompany..................... 86,000 107,500;Property, Plant,andEquipment..................2,250,000 850,000 350,000;Accumulated Depreciation...................... (938,000) (377,500) (121,800;Mary John Joan;Intangibles................................... 15,000;Accounts Payable............................. (215,500) (61,000) (22,000);AccruedExpenses............................. (12,000) (4,000) (1,200);BondsPayable................................ (500,000) (300,000) (100,000);Common Stock($5par)........................ (500,000);Common Stock($10par)....................... (150,000);Common Stock($10par)....................... (100,000);Paid-In Capital inExcessof Par................. (700,000) (75,000);RetainedEarnings, January1, 2014......... (290,000) (130,000) (80,000);Sales....................................... (1,800,000) (500,000) (300,000);Gainon SaleofEquipment...................... (10,000);SubsidiaryIncome............................. (58,000) (20,000);CostofGoods Sold............................ 1,170,000 350,000 180,000;OtherExpenses............................... 525,000 100,000 90,000;Dividends Declared............................ 75,000 15,000 5,000;Totals..................................... 0 0 0;Prepare the worksheet necessary to produce the consolidated?nancial statements of Mary;Company and its subsidiaries as of December 31, 2014. Include the determination and distri-;bution of excess and income distribution schedules. Any excess of cost is assumed to be attribu-;table to goodwill.

 

Paper#74385 | Written in 18-Jul-2015

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