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a.
b.
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d.
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f.
g.
Adjustment and Elimination Journal
Account Name
To eliminate intercompany sales and related cost of goods
Sales
Cost of good sold
To adjust cost of goods and beginning investment balance for
unrealized profit s in the beginning inventory
Investment in Seay
Cost of good sold
To eliminate unrealized profit in the ending inventory and to
increase cost of goods sold to a cost basis to the consolidated
Cost of goods sold
Inventory
To eliminate the investment income and 90% of devidens of Seay
and to reduce the investment account to its beginning-of-the
period balance, plus the $2,000 from entry b
Income formSeay
Devidends
Investment in Seay
To enter minorityinterest share of subsidiary income and dividends
Minority interest expense
Deviden-Seay
Minority interest
To eliminate reciprocal investment and equity balance and
record beginning minority interest
Capital stock-Seay
Retained earnings-Seay
Investment in Seay
Minority interest
To eliminate recoprocal payables and receivables from
intercompany sales
Accounts payables
accounts receivable
Debit ($) Credit ($)
20,000
20,000
2,000
2,000
2,500
2,500
26,500
9,000
17,500
3,000
1,000
2,000
100,000
45,000
130,500
14,500
10,000
10,000
PEAK CORPORATION AND SUBSIDIARY
CONSOLIDATION WORKING PAPERS
FOR THE YEAR ENDED DECEMBER 31, 2007 (IN THOUSANDS)
Account Name Peak ($) 90% Seay($)
Income Stetement
Net sales 1,000.00 300.00
income from Seay 26.50
cost of good sold (550.00) (200.00)
Other axpense (350.00) (70.00)
minority interest
($30,000 x 10%)
Net Income 126.50 30.00
Retained Eranings
Retained earning-Peak 194.00
Retained earning-Seay 45.00
Net income 126.50 30.00
Devidends (50.00) (10.00)
Retained earnings-Decemeber 31, 2007 270.50 65.00
Balance Sheet
cash 30.00 5.00
Account receivables 70.00 20.00
Inventories 90.00 45.00
Other current assets 64.00 10.00
Plant and equipment 800.00 120.00
Investment in Say 146.00 -
Total assets 1,200.00 200.00
current liabilities 80.00 15.00
Other liabilities 49.50 20.00
capital stock 800.00 100.00
retained earnings 270.50 65.00
Total equities 1,200.00 200.00
Minority interest january 1
Minority interest December 31
Total Liabilites & Equities
To record income from Seay for 2007
Equity in Seay's net income (30,000 x 90%)27,000.00
Add: 2006 inventory profit recognized in 20072,000.00
Less: 2007 inventory profit deferred at year end(2,500.00)
Total income formSeay for 2007 26,500.00
To record investment of Seay 2007Investment in Sharp December 31, 2006 128,500.00 Income from Sharp 2007 (90%of Sharp's $30,000 net income)27,000.00
inventory profit recognized in 2007 2,000.00
inventory profit deferred at year end (2,500.00)
Less: Dividend received 2007 (9,000.00)
Investment in Sharp December 31, 2007 146,000.00
Consolidated statement
a. 20.00 1,280.00
d. 26.50
c. 2.50 a. 20.00 (730.50)
b. 2.00
(420.00)
e. 3.00 (3.00)
126.50
194.00
f. 45.00
126.50
d. 9.00 (50.00)
e. 1.00 270.50
35.00
g. 10.00 80.00
c. 2.50 132.50
74.00
920.00
b. 2.00 d. 17.50
f. 130.50
Adjustment and Eliminations
1,241.50
g. 10.00 85.00
69.50
f. 100.00 800.00
f. 65.00 270.50
f. 14.50
e. 2.00 16.50
1,241.50
a.
b.
c.
d.
e.
f.
g.
Adjustment and Elimination Journal
Account Name
To eliminate intercompany sales and related cost of goods
Sales
Cost of good sold
To adjust cost of goods and beginning investment balance for
unrealized profit s in the beginning inventory
Investment in San
Minority Interest
Cost of goods sold
To eliminate unrealized profit in the ending inventory and to
increase cost of goods sold to a cost basis to the consolidated
Cost of goods sold
Inventory
To eliminate the investment income and 90% of devidens of Seay
and to reduce the investment account to its beginning-of-the
period balance, plus the $2,000 from entry b
Income form San
Devidends
Investment in San
To enter minorityinterest share of subsidiary income and dividends
Minority interest expense
Deviden-San
Minority interest
To eliminate reciprocal investment and equity balance and
record beginning minority interest
Capital stock-San
Retained earnings-San
Goodwill
Investment in San Minority interest
To eliminate recoprocal payables and receivables from
intercompany sales
Accounts payables
accounts receivable
Debit ($) Credit ($)
560,000
560,000
7,200
800
8,000
12,000
12,000
86,400
45,000
41,400
9,600
5,000
4,600
200,000
70,000
50,000
293,000 27,000
10,000
10,000
PO CORPORATION AND SUBSIDIARY
CONSOLIDATION WORKING PAPERS
FOR THE YEAR ENDED DECEMBER 31, 2010 (IN THOUSANDS)
Account Name Po ($)
Income Statement
Net sales 819,000.00
income from San 86,400.00
cost of good sold (546,000.00)
Other expense (154,400.00)
Minority interest
Net Income 205,000.00
Retained Eranings
Retained earning-Po 130,000.00
Retained earning-San
Net income 205,000.00
Devidends (100,000.00)
Retained earnings-Decemeber 31, 2007 235,000.00
Balance Sheet
cash 75,800.00
Account receivables
Inventories 42,000.00
Other current assets 60,000.00
Net fixed asset 300,000.00
Investment in San 327,200.00
goodwill
Total assets 805,000.00
current liabilities 170,000.00
capital stock 400,000.00
retained earnings 235,000.00
Total equities 805,000.00
Minority interest january 1
Minority interest December 31
Total Liabilites & Equities
To record income from San for 2010 computed as follows:
Equity in San's net income (100,000 x 90%) 90,000.00
Add: 90% of $8.000 unrealized profit deferred in 20097,200.00
Less: 90% of $12.000 unrealized profit at December (10,800.00)
31, 2010
Total income form San for 2010 86,400.00
To record Minority Interest as follows:
Reported net income of San 90,000.00
Add: Inventory profit from 2009 realized in 2010 7,200.00
Deduct: Unrealized profit at December 31, 2010 (10,800.00)
San's realized income for 2010 86,400.00
Minority interest percentage 10%
Minority interest expense 8,640.00
San($) Consolidated stat.
560,000.00 a. 560,000.00 819,000.00
d. 86,400.00 -
(400,000.00) c. 12,000.00 a. 560,000.00 (390,000.00)
b. 8,000.00
(60,000.00) (214,400.00)
e. 9,600.00 (9,600.00)
100,000.00 205,000.00
130,000.00
70,000.00 f. 70,000.00
100,000.00 205,000.00
(50,000.00) d. 45,000.00 (100,000.00)
e. 5,000.00
120,000.00 235,000.00
50,000.00 125,800.00
g. 10,000.00 (10,000.00)
80,000.00 c. 12,000.00 110,000.00
20,000.00 80,000.00
300,000.00 600,000.00
- b. 7,200.00 d. 41,400.00 -
f. 293,000.00
f. 50,000.00 50,000.00
450,000.00 955,800.00
Adjustment and Eliminations
130,000.00 g. 10,000.00 290,000.00
200,000.00 f. 200,000.00 400,000.00
120,000.00 235,000.00
450,000.00
b. 800.00 f. 27,000.00
e. 4,600.00 30,800.00
955,800.00
