Assignment of Differential in Workpaper
a. Complete a consolidated balance sheet workpaper for January 1, 20X4.
b. Prepare a consolidated balance sheet in good form.
Teresa Corporation purchased all the voting shares of Sally Enterprises on January 1, 20X4. Balancesheet amounts for the companies on the date of acquisition were as follows:
Teresa Sally
Corporation Enterprises
Cash and Receivables $ 40,000 $ 20,000
Inventory 95,000 40,000
Land 80,000 90,000
Buildings and Equipment 400,000 230,000
Investment in Sally Enterprises 290,000
Total Debits $905,000 $380,000
Accumulated Depreciation $175,000 $ 65,000
Accounts Payable 60,000 15,000
Notes Payable 100,000 50,000
Common Stock 300,000 100,000
Retained Earnings 270,000 150,000
Total Credits $905,000 $380,000
Sally Enterprises’ buildings and equipment were estimated to have a market value of $175,000 on January1, 20X4. All other items appeared to have market values approximating current book values.