[hershbkl]

Separate financial statements for P Company and S Company for the year ended December 31, 20X3 are presented below:

P Company S Company
12/31/X3 12/31/X3
Income Statement
Sales $ 600,000 $ 140,000
Equity in subsidiary income (loss) (6,096)
Gain on sale of equipment 5,000 200
Gain on sale of land 180 90
Cost of goods sold (320,000) (70,000)
Operating expenses (200,000) (64,000)
Depreciation expense (8,000) (4,000)
Net income $ 71,084 $ 2,290

Statement of Retained Earnings
Retained earnings, 1/1 $ 157,880 $ 32,000
Net income 71,084 2,290
Dividends (50,000) (12,000)
Retained earnings, 12/31 $ 178,964 $ 22,290
Balance Sheet
Cash $ 111,080 $ 14,890
Accounts receivable, net 44,000 8,000
Inventory 40,000 12,000
Land 81,700 12,400
Building and equipment 184,600 48,000
Accumulated depreciation (12,000) (7,600)
Investment in S Company 44,184
Total assets $ 513,564 $ 87,690
Accounts payable $ 80,000 $ 14,539
Bonds payable, net 194,600 30,861
Common stock 40,000 15,000
Additional paid-in capital 20,000 5,000
Retained earnings 178,964 22,290
Total liabilities & stockholders’ equity $ 513,564 $ 87,690

Additional information:
1. During 20X3, P Company sold merchandise costing $6,000 to S Company for $9,000.
2. During 20X3, S Company sold merchandise costing $3,000 to P Company for $3,900.
3. Before the end of 20X3, S Company sold 60% of the merchandise it purchased from P Company during 20X3.
4. Before the end of 20X3, P Company sold two-thirds of the merchandise it purchased from S Company during 20X3.
5. During 20X3, S Company sold land costing $1,600 to P Company for $1,690.
6. During 20X3, P Company sold land costing $600 to S Company for $780.
7. On January 1, 20X3, P Company sold equipment originally purchased for $17,000 to S Company for $12,000. Accumulated depreciation over the 12 years of use before the intercompany sale was $10,000. The estimated remaining life at the time of transfer was 10 years.
8. On January 1, 20X3, S Company sold equipment to P Company for $1,600. On the date of sale, S Company’s records indicated that the equipment cost $4,000 and had accumulated depreciation of $2,600. The equipment is estimated to have a remaining life of five years.
9. Goodwill has been impaired in the amount of $500 as of December 31, 20X3.

Required:
Complete consolidation worksheets for the year ended December 31, 20X3 for P Company and its consolidated subsidiary S Company (show all necessary computations).




Separate financial statements for P Company and S Company for the years ended December 31, 20X4 are presented below:

P Company S Company
12/31/X4 12/31/X4
Income Statement
Sales $ 620,000 $ 160,000
Equity in subsidiary income (loss) 3,166
Gain on sale of equipment 1,000
Gain on sale of land 120
Loss on sale of equipment (100)
Loss on sale of land (600)
Cost of goods sold (360,000) (80,000)
Operating expenses (240,000) (70,000)
Depreciation expense (8,000) (4,000)
Net income $ 15,066 $ 6,520

Statement of Retained Earnings
Retained earnings, 1/1 $ 178,964 $ 22,290
Net income 15,066 6,520
Dividends (60,000) (14,000)
Retained earnings, 12/31 $ 134,030 $ 14,810
Balance Sheet
Cash $ 92,200 $ 9,790
Accounts receivable, net 50,000 10,000
Inventory 44,000 14,000
Land 84,700 8,620
Building and equipment 178,100 48,000
Accumulated depreciation (18,920) (9,600)
Investment in S Company 38,950
Total assets $ 469,030 $ 80,810
Accounts payable $ 80,000 $ 15,262
Bonds payable, net 195,000 30,738
Common stock 40,000 15,000
Additional paid-in capital 20,000 5,000
Retained earnings 136,030 14,810
Total liabilities & stockholders’ equity $ 469,030 $ 80,810

Additional information:
1. During 20X4, P Company sold merchandise costing $4,500 to S Company for $6,750.
2. During 20X4, S Company sold merchandise costing $1,350 to P Company for $1,800.
3. Before the end of 20X4, S Company sold one-third of the merchandise it purchased from P Company during 20X4.
4. At the end of 20X4, P Company continues to hold all of the units purchased from S Company during 20X4.
5. During 20X4, S Company sold the land purchased from P during 20X3 to an unaffiliated party for $900.
6. During 20X4, S Company sold land that cost $3,600 to P Company for $3,000.
7. On January 1, 20X4, P Company sold equipment originally purchased for $10,500 to S Company for $5,000. Accumulated depreciation before the intercompany sale was $5,400. The estimated remaining life at the time of transfer was 5 years.
8. On July 1, 20X4, S Company sold equipment to P Company for $4,000. On the date of sale, S Company’s records indicated that the equipment cost $5,000 and had accumulated depreciation of $2,000. The equipment is estimated to have a remaining life of 5 years.
9. There is no indication that goodwill has been impaired as of December 31, 20X4.

Required:
Complete consolidation worksheets for the year ended December 31, 20X4 for P Company and its consolidated subsidiary S Company (show all necessary computations).

[Curlyben]

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