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Parent Corporation paid $105,000 to acquire 75% of the common shares of Subsidiary Inc. on December 31, 2017. At that date, Parent Corporation also...
Parent Corporation paid $105,000 to acquire 75% of the common shares of Subsidiary Inc. on December 31, 2017. At that date, Parent Corporation also had an outstanding note payable to Subsidiary Inc. in the amount of $20,000.
Assume that Parent Corporation and Subsidiary Inc. had the following account balances at December 31, 2017 (immediately after the investment):
Assets: Parent Subsidiary
Corporation Inc.
Cash $ 35,000 $ 15,000
Note receivable from Parent Corporation 20,000
Inventory 120,000 30,000
Investment in Subsidiary Inc. 105,000
Other assets 495,000 65,000
Total $755,000 $130,000
Liabilities and shareholders' equity:
Accounts payable $ 15,000 $10,000
Note payable to Subsidiary Inc. 20,000
Common shares 500,000 90,000
Retained earnings 220,000 30,000
Total $755,000 $130,000
Prepare the necessary eliminating journal entries that would appear on the December 31, 2014 worksheet for a consolidated balance sheet.
