| 1) | On 1/1/2015, Falcon Inc. purchased 10% of the stock in University Co. for $200,000 |
| | University reported the following information for in 2015 & 2016: |
| | 2015: |
| | Net Income | 75,000 |
| | Dividends | 60,000 |
| | 2016: |
| | Net Income | 25,000 |
| | Dividends | 45,000 |
| | Record all journal entries for 2015 and 2016 including the initial purchase: | | | | | | 7 Points |
| | (Assume that a significant influence does NOT exist) |
| 2) | Assume the same information as above, except Falcon Inc. purchased 40% of the stock in University Co. fo $500,000 |
| | Record all journal entries for 2015 and 2016 including the initial purchase: | | | | | | 10 Points |
| | (Assume that a significant influence exists) |
| 3) | Using the information reported below for Calvin Inc. and Hobbes Corporation, a wholly-owned subsidiary of Calvin Inc., Prepare a Consolidation Worksheet. 18 Points |
| | (Assume that Calvin purchased 100% of Hobbes on 1/1/2016 for $300,000. The information below is the ending financials for each company on 12/31/16.) |
| | | | Calvin Inc. | | | | Hobbes Corp. |
| | Income Statement | | | | Income Statement |
| | Sales | | 800,000 | | Sales | | 250,000 |
| | Less: COGS | | (350,000) | | Less: COGS | | (75,000) |
| | Income from Hobbes | | 175,000 |
| | Net Income | | 625,000 | | Net Income | | 175,000 |
| | Statement of RE | | | | Statement of RE |
| | Beg. RE | | 225,000 | | Beg. RE | | 200,000 |
| | Add: Net Income | | 625,000 | | Add: Net Income | | 175,000 |
| | Less: Dividends | | (100,000) | | Less: Dividends | | (50,000) |
| | End RE | | 750,000 | | End RE | | 325,000 |
| | Balance Sheet | | | | Balance Sheet |
| | Cash | | 230,000 | | Cash | | 100,000 |
| | Accounts Rec. | | 155,000 | | Accounts Rec. | | 75,000 |
| | Inventory | | 115,000 | | Inventory | | 65,000 |
| | Investment in Hobbes | | 425,000 |
| | PP&E | | 500,000 | | PP&E | | 300,000 |
| | Less: Accum. Depr | | (200,000) | | Less: Accum. Depr | | (70,000) |
| | Total Assets | | 1,225,000 | | Total Assets | | 470,000 |
| | Accounts Payable | | 75,000 | | | | 45,000 |
| | Common Stock | | 400,000 | | Common Stock | | 100,000 |
| | Retained Earnings | | 750,000 | | Retained Earnings | | 325,000 |
| | Total Liab. & Equity | | 1,225,000 | | Total Liab. & Equity | | 470,000 |
| 4) | How would the investment in Hobbes Corporation at the end of 2016 and the elimination entries be different if Calvin Inc. only owned 80% of Hobbes Corporation? |
| | (Assume that Calvin purchased 80% of Hobbes on 1/1/2016 for $240,000.) | | | | | | 15 Points |
| | Provide the amount that would be reported on Calvin's Balance Sheet as Investment in Hobbes. |
| | Record all Elimination Entries including NCI entries (a consolidation worksheet is not needed). |
COURTMCLARKE777
homework_2.xlsx
