Exercise 8 (LO 3) Cost method, second year, eliminations, income state- ment. The trial balances…

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…

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