Eliminations Consolidated

Pal A B Debit Credit

INCOME STATEMENT
Sales 200,000 150,000 100,000
Income from A 13,800
Income from B 12,000 4,000
Cost of Sales (100,000) (80,000) (50,000)
Other Expenses ( 40,000) (35,000) (30,000)
Gain on Land 10,000
MI Expense A
MI Expense B
Net income 95,800 39,000 20,000
Retained Earnings 1/1 223,000 50,000 80,000
Add: Net income 95,800 39,000 20,000
Less: Dividends ( 40,000) (20,000) ( 10,000)

Retained Earnings 12/31 278,800 69,000 90,000

BALANCE SHEET
Cash 50,600 19,600 85,000
Inventories 50,000 40,000 15,000
Plant assets 400,000 200,000 100,000
Investment in A: 70% 183,200
Investment in B: 60% + 20% 121,200
Goodwill
TOTAL ASSETS $805,000 300,000 $200,000
LIAB. & EQUITY
Accounts payable 126,200 31,000 10,000
Capital Stock 400,000 200,000 100,000
Retained Earnings 278,800 69,000 90,000

12/31 NC Interest
$
TOTAL LIAB. & EQUITY 805,000 300,000 $200,000
CH 9: Exercise: Indirect Holdings
On 1/1/2020, Pal acquired 70% of A and 60% of B. A acquired 20% of B.
P A B
Earnings 70,000 35,000 20,000
Dividends 40,000 20,000 10,000
P sold land to B and unrealized gain was $10,000. Co. A, sold goods of $15,000 to P and unrealized gain
was $5,000. A goodwill of $12,000 was attributed to each subsidiary on acquisition date, when the
beginning investment in A and B was $183,400 and $115,200. Co. A invested $38,400 in Co. B.
 Eliminations Consolidated
Pal A B Debit Credit
INCOME STATEMENT
Sales 200,000 150,000 100,000 15,000 435,000
Income from A 13,800
Income from B 12,000 4,000 16,000
Cost of Sales (100,000) (80,000) (50,000) 5,000 15,000 (220,000)
Other Expenses ( 40,000) (35,000) (30,000) (105,000)
Gain on Land 10,000 10,000
MI Expense A 10,200 ( 10,200)
MI Expense B 4,000 ( 4,000)
Net income 95,800 39,000 20,000 95,800
Retained Earnings 1/1 223,000 50,000 80,000 223,000
Add: Net income 95,800 39,000 20,000 95,800
Less: Dividends ( 40,000) (20,000) ( 10,000) ( 40,000)
Retained Earnings 12/31 278,800 69,000 90,000 278,800

BALANCE SHEET
Cash 50,600 19,600 85,000 155,200
Inventories 50,000 40,000 15,000 5,000 100,000
Plant assets 400,000 200,000 100,000 10,000 690,000
Investment in A: 70% 183,200 183,200
Investment in B: 60% + 20% 121,200 121,200
Goodwill 12,000 24,000
12,000
TOTAL ASSETS $805,000 300,000 $200,000 969,200
LIAB. & EQUITY
Accounts payable 126,200 31,000 10,000 167,200
Capital Stock 400,000 200,000 100,000 400,000
Retained Earnings 278,800 69,000 90,000 278,800
12/31 NC Interest 123,200
$
TOTAL LIAB. & EQUITY 805,000 300,000 $200,000 969,200