Assignment title: Information
UNIVERSIDAD DEL TURABO
CONTABILIDAD 450
PROGRAMA AHORA
EXAMEN I-A
NOMBRE ________________________________ FECHA_______________________
Bower Corporation paid $5,000 for a 60% interest in Fig Inc. on
January 1, 2005 when Fig’s stockholders’ equity consisted of $5,000
Capital Stock and $2,500 Retained Earnings. Fig’s assets and
liabilities were fairly valued on this date. Two years later, on
December 31, 2006, the balance sheets of Bower and Fig are summarized
as follows:
Bower Corporation and Subsidiary
Consolidated balance Sheet Working Papers
at December 31, 2006
Bower Fig Eliminatio
ns Balan
ce
Sheet
Debit Credi
t
ASSETS
Current
assets
$ 12,55
0
$
4,000
Fixed
assets
21,55
0
6,500
Investment
in
Fig
5,900
Total
Assets
$
40,00
0
$10,5
00
EQUITIES
Liabilitie
s
$
10,00
0
$
1,500
Capital
stock
20,00
0
5,000
Retained
Earnings 10,00
0
4,000
TOTAL
EQUITIES
$ 40,00
0
$10,5
00
Required:
Complete the consolidated balance sheet working papers for Bower
Corporation and Subsidiary at December 31, 2006.
Koel Corporation acquired all the voting stock of Rain Company for
$500,000 on January 1, 2005 when Rain had Capital Stock of $300,000
and Retained Earnings of $150,000. Rain’s assets and liabilities were
fairly valued except for the plant assets. The entire cost-book
differential is allocated to plant assets and is fully depreciated on
a straight-line basis over a 10-year period.
During 2005, Koel borrowed $25,000 on a short-term non-interest-
bearing note from Rain, and on December 31, 2005, Koel mailed a check
to Rain to settle the note. Rain deposited the check on January 5,
2006, but receipt of payment of the note was not reflected in Rain’s
December 31, 2005 balance sheet.
Required:
Complete the consolidation working papers.
Koel Corporation and Subsidiary
Consolidated Balance Sheet Working Papers
at December 31, 2005
Koel Rain
Eliminations Non
-
Cnt
l
Balance
Sheet Debit Credit
INCOME
STATEMENT
Sales
$ 500,000 $400,000
Income from
Rain 135,000
Cost of Sales (350,000
)
(200,000
)
Other expenses (100,000
)
(60,000)
Net income 185,000 140,000
Koel Retained
Earnings 1/1 300,000
Rain Retained
Earnings 150,000
Add:
Net income $ 185,000 $140,000
Less:
Dividends (70,000)
Retained
Earnings 12/31 $ 485,000 $220,000
BALANCE SHEET
Note
Receivable
from Koel
25,000
Other current
assets 210,000 300,000
Plant assets-
net 200,000 425,000
Investment in
Rain Company 565,000
TOTAL ASSETS $ 975,000 $750,000
EQUITIES
Liabilities 290,000 230,000
Capital Stock 200,000 300,000
Retained
Earnings 485,000 220,000
TOTAL EQUITIES $ 975,000 $750,000