Advanced Financial Accounting

Combination Report
 Pro Company and Subsidiary
Consolidated Balance Sheet
January 1,2010
Assets Liabilities
Cash $100,000 Account $200,000
Payable
Accounts 125,000 Bonds Payable 300,000
Receivable
Inventory 160,000
Land 215,000 Stockholder’s
Equity
Buildings & 1,100,000 Commond 500,000
Equipment Stock
Accumulated (400,000) 700,000 Retained 300,000
Depreciation Earnnings
Total Assets 1,300,000 Total Liabilities 1,300,000
& Equity
 Consolidate Net Income
During 2010, Siri reports net income of $25,000
while Pro reports net income of $125,000 including
equity method income from Siri of $25,000.

Pro’s net income $125,000

Equity method income from Siri (25,000)
Siri’s net income 25,000

Consolidated net income $125,000

 Retained Earnings
Assume that in January 1, 2010 Pro’s retained earnings
balance is $400,000 and Siri’s isi $250,000. During 2010, Siri
reports $25,000 of net income and declared $10,000 of
devidends. Pro report $100,000 of separate operating earning
plus $25,000 of equity method income from 100% interest in
Siri; Pro declares devidend of $30,000.
Pro Siri

Balance, January 1, 2010 $400,000 $250,000

Net income,2010 125,000 25,000

Dividend declaredin 2010 (30,000) (10,000)

Balance, December $495,000 $265,000

31,2010
 Information about Pro dan Siri Company on
January 1,2010, and for 2010 and 2011
Pro Company Siri Company
Commond Stock, January $500,000 $200,000
1, 2010
Retained Earnings,January 300,000 100,000
1, 2010
2010
Separate Operating 140,000
Income, Pro company
Net income, Siri Company 50,000
Dividends 60,000 30,000
2011
Separate Operating 160,000
Income, Pro Company
Net income, Siri Company 75,000
Dividends 60,000 40,000
 Journal Entry
Investment in Siri Company $300,000
Cash $300,000
(Record purchase of Siri company stock)
 Journal Entry
Investment in Siri Company $50,000
Income from Special Food $50,000
(Record Pro 100% share of Siri income)

Cash $30,000
Investment $30,000
 Journal Entry
Common Stock $200,000
Retained Earning 100,000
Income from Siri Company 50,000
Dividends declared $ 30,000
Investment in Siri Company 320,000
(Record Elimination)