Exercise 8 (LO 3) Cost method, second year, eliminations, income state- ment. The trial balances…
Exercise 8 (LO3) Cost method, second year, eliminations, income state- ment. The trial balances of Pepper and Sultan companies of Exercise 7 for December 31, 20X2, are presented as follows:
|
Pepper |
Sultan |
||
|
Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
152,000 |
115,000 |
|
|
Depreciable Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
400,000 |
200,000 |
|
|
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
(130,000) |
(40,000) |
|
|
Investment in Sultan Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
250,000 |
||
|
Current Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
(80,000) |
||
|
Common Stock ($10 par) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
(300,000) |
(100,000) |
|
|
Retained Earnings, January 1, 20X2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
(244,000) |
(170,000) |
|
|
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
(200,000) |
(100,000) |
|
|
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
160,000 |
85,000 |
|
|
Dividend Income (from Sultan Company) . . . . . . . . . . . . . . . . . . . . . . . . . |
(8,000) |
||
|
Dividends Declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
10,000 |
||
|
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
0 |
0 |
Pepper Company continues to use the cost method.
1. Prepare all the eliminations and adjustments that would be made on the 20X2 consolidated worksheet.
Exercise 8 (LO 3) Cost method, second year, eliminations, income state- ment. The trial balances…