Homework

Stork Corporation paid $15,300 for a 90% interest in Swamp Corporation on January 1, 2004, when Swamp stockholders’ equity consisted of $10,000 Capital Stock and $3,000 of Retained Earnings. The non-controlling interest was valued at $1,700 on January 1, 2004. The excess cost over book value was attributable to goodwill.

The affiliates regularly engage in transactions with each other. During 2004 and 2005, Stork had the following sales to Swamp.

Year                       Transfer price to Swamp               Cost to Stork                      Ending Bal. (at transfer price)

2004                       8,000                                                     6,000                                     1,600

2005                       6,000                                                     3,000                                     1,200

At year-end 2005 Swamp owed Stork $1,500 for the inventory purchased during 2005.

Separate company financial statements for Stork Corporation and Subsidiary at December 31, 2005 are summarized in the first two columns of the consolidation working papers.

REQUIRED:

Prepare eliminating journal entries

Complete the consolidated worksheet for year ended December 31, 2005.