Parent Company hw

parent_company.xlsx

Task 1-Consolidation Entries

Consolidation Eliminating Entry
Account Title	Debit	Credit
Income from Subsidiary	35,000
Investment in subsidiary		35,000
(Equity in subsidiary's income transferred)
Eliminating entries
Common Stock	200,000
Retained Earnings	15,000
Differential	40,000
Investment in Subsidiary		255,000
(Eliminating investment account)
Inventory	20,000
Depreciable asset	70,000
Bargain Purchase		50,000
Differential		40,000
(Differential allocated to assets and bargain purchase)
Sale	10,000
Cost of goods sold		10,000
( Eliminating intercompany sale of goods)
Income from subsidiary	5,000
Inventory		5,000
(Eliminating unrealized gain )
Accounts Payable	10,000
Accounts Receivable		10,000
(Eliminating accounts receivable balance)
Long Term Notes Payable	100,000
Long term Notes Receivable		100,000
(Eliminating notes receivable balance)
Sales revenue	7,000
Administrative expenses		7,000
(Eliminating consulting service revenue)

Parent and Subsidiary Company
Consolidation Worksheet
	Parent Company	Subsidiary Company	Adjustments		Consolidated
			Dr	Cr
Sales Revenue	750,000	245,000	107,000		888,000
Less: Cost of Goods Sold	(330,000)	(160,000)		100,000	(390,000)	(170,000)
Selling Expenses	(100,000)	(45,000)			(145,000)
Administrative Expenses	(120,000)	(70,000)		7,000	(183,000)	(197,000)
Interest Expense	(24,000)	(5,000)			(29,000)
Income from subsidiary	(35,000)		(35,000)		- 0
Consolidated net income	141,000	(35,000)	72,000	107,000	141,000
Statement of Retained earnings
Beginning Balance	482,000	50,000	50,000		482,000
Net Income	141,000	(35,000)	(35,000)		141,000
Less: Dividend declared	- 0	- 0			- 0
Ending Balance	623,000	15,000
Balance sheet
Assets
Cash	10,000	4,000	- 0	- 0	14,000
Accounts Receivable	25,000	10,000		10,000	25,000
Inventory	30,000	12,000	25,000	5,000	62,000
Short-Term Investments	40,000	6,000			46,000
Prepaid Assets	35,000	12,000			47,000
Investment in Subsidiary	255,000		50,000	215,000	- 0
				90,000
Long-Term Notes Receivable	150,000	14,000		100,000	64,000
Debt Service Fund	50,000				50,000
Depreciable Assets	900,000	350,000	50,000		1,300,000
Accumulated Depreciation	(200,000)	(50,000)	20,000		(230,000)
Intangible Assets	45,000	20,000		50,000	15,000
Total Assets	1,340,000	378,000			1,393,000
Liabilities & Shareholder's Equity
Current Liabilities	92,000	44,000	10,000		126,000
Long-Term Notes Payable	225,000	119,000	100,000		244,000
Common Stock	400,000	200,000	200,000		400,000
Retained Earnings	623,000	15,000	15,000		623,000
Total Liabilities and Equity	1,340,000	378,000	470,000	470,000	1,393,000

Parent company
Statement of financial position for the year ended 31 December 2012
Assets	Amount	Amount
Current Assets:
Cash	14,000
Accounts Receivable	25,000
Inventory	62,000
Short-Term Investments	46,000
Prepaid Assets	47,000
Total current Assets		194,000
Long-Term Notes Receivable		64000
Debt Service Fund		50000
Depreciable Assets	1300000
Accumulated Depreciation	(230,000)	1,070,000
Intangible Assets		15000
Total Assets		1,393,000
Liabilities and shareholder's equity
Liabilities:
Current Liabilities:
Accounts Payable	126,000
Total current liabilities		126,000
Long Term Liability
Notes Payable		244,000
Total Liabilities		370,000
Shareholder's equity
Contributed capital	400,000
Retained Earnings	623,000
Total shareholder's equity		1,023,000
Total Liabilities and Shareholder's Equity		1,393,000

	Parent Company
	Statement of Comprehensive Income for the year ended 31st December 2012
	Revenues:
	Sales revenue	888,000
	Less:
	Cost of Goods Sold	(390,000)
	Selling Expenses	(145,000)
	Administrative Expenses	(183,000)
	Interest Expense	(29,000)
	Profit after tax	141,000
	Parent Company
	Statement of Change in Equity
	Beginning retained earnings	482,000
	Add: Net income	141,000
		623,000
	Less: Dividends	0
	Ending retained earnings	623,000

Converting Consolidated Balance sheet and Income Statement into US dollars.
	Parent Company
	Statement of financial position for the year ended 31st December 2012
	Assets	Pounds	Exchange Rate	Amount ( $)
	Current Assets:
	Cash	14,000	1.2	16,800
	Accounts Receivable	25,000	1.2	30,000
	Inventory	62,000	1.2	74,400
	Short-Term Investments	46,000	1.2	55,200
	Prepaid Assets	47,000	1.2	56,400
	Total current Assets	194,000		232,800
	Investment
	Long-Term Notes Receivable	64,000	1.2	76,800
	Debt Service Fund	50,000	1.2	60,000
	Plant Property & equipment
	Depreciable Assets	1,300,000	1.2	1,560,000
	Less: Accumulated Depreciation	(230,000)	1.2	(276,000)
	Net depreciable assets	1,070,000		1,284,000
	Intangible Assets	15,000	1.2	18,000
	Total Assets	1,393,000		1,671,600
	Liabilities and shareholder's equity
	Current Liabilities:
	Accounts Payable	126,000	1.2	151,200
	Long Term Liability
	Notes Payable	244,000	1.2	292,800
	Total Liabilities	370,000		444,000
	Shareholder's equity
	Contributed capital	400,000	1.24	496,000
	Retained Earnings	623,000		769,700
	Cumulative Translation Adjustment(to balance)			(38,100)
	Total shareholder's equity	1,023,000		1,227,600
	Total Liabilities and Shareholder's Equity	1,393,000		1,671,600

Parent Company
Statement of Comprehensive Income for the year ended 31st December 2012
Revenues:	Pounds	Exchange Rate	Dollar($)
Sales revenue	888,000	1.22	1,083,360
Less:
Cost of Goods Sold	(390,000)	1.22	(475,800)
Selling Expenses	(145,000)	1.22	(176,900)
Administrative Expenses	(183,000)	1.22	(223,260)
Interest Expense	(29,000)	1.22	(35,380)
Profit after tax	141,000		172,020
Parent Company
Statement of Change in Equity for the year ended 31st December 2012
	Pounds	Exchange Rate	Dollar($)
Beginning retained earnings	482,000	1.24	597,680
Add: Net income	141,000	1.22	172,020
	623,000		769,700
Less: Dividends	- 0		- 0
Ending retained earnings	623,000		769,700