Chapter 06 – Intercompany Inventory Transactions
P6-34 (continued)
Randall
Corp.
Sharp
Co.
Consolidation
Entries
DR
CR
Consolidated
Income Statement
Sales
500,000
250,000
57,000
693,000
Other Income
20,400
30,000
50,400
Less: COGS
(416,000)
(202,000)
10,000
(564,000)
44,000
Less: Depreciation & Amortization Exp.
(30,000)
(20,000)
5,000
(55,000)
Less: Other Expenses
(24,000)
(18,000)
(42,000)
Income from Sharp Co.
25,400
29,400
4,000
0
Consolidated Net Income
75,800
40,000
91,400
58,000
82,400
NCI in Net Income
7,600
1,000
(6,600)
Controlling Interest in Net
Income
75,800
40,000
99,000
59,000
75,800
Statement of Retained Earnings
Beginning Balance
337,500
215,000
215,000
337,500
Net Income
75,800
40,000
99,000
59,000
75,800
Less: Dividends Declared
(50,000)
(25,000)
25,000
(50,000)
Ending Balance
363,300
230,000
314,000
84,000
363,300
Balance Sheet
Cash
130,300
10,000
140,300
Accounts Receivable
80,000
70,000
10,000
140,000
Inventory
170,000
110,000
13,000
267,000
Buildings & Equipment
600,000
400,000
50,000
40,000
1,010,000
Less: Accumulated Depreciation
(310,000)
(120,000)
40,000
20,000
(410,000)
Investment in Sharp Co.
293,000
8,400
277,400
0
24,000
Total Assets
963,300
470,000
98,400
384,400
1,147,300
Accounts Payable
100,000
15,200
10,000
105,200
Bonds Payable
300,000
100,000
400,000
Bond Premium
4,800
4,800
Common Stock
200,000
100,000
100,000
200,000
Additional Paid-in Capital
20,000
20,000
0
Retained Earnings
363,300
230,000
314,000
84,000
363,300
NCI in NA of Sharp Co.
1,600
69,600
74,000
6,000
Total Liabilities & Equity
963,300
470,000
445,600
159,600
1,147,300
Chapter 06 – Intercompany Inventory Transactions
Excess Value (Differential) Calculations:
NCI
20%
+
Randall Corp.
80%
=
Buildings &
equipment
+
Acc. Depr.
Beginning balance
7,000
28,000
50,000
(15,000)
Changes
(1,000)
(4,000)
(5,000)
Ending balance
6,000
24,000
50,000
(20,000)
P6-35A (continued)
Amortized Excess Value Reclassification Entry:
Depreciation Expense
5,000
Income from Sharp Co.
4,000
NCI in NI of Sharp Co.
1,000
Excess Value (Differential) Reclassification Entry:
Buildings & equipment
50,000
Accumulated depreciation
20,000
Investment in Sharp Co.
24,000
NCI in NA of Sharp Co.
6,000
Eliminate Intercompany Accounts:
Accounts Payable
10,000
Accounts Receivable
10,000
Optional Accumulated Depreciation Consolidation Entry
Accumulated Depreciation
40,000
Building & Equipment
40,000
Reversal of last year’s deferral:
Retained earnings
8,400
NCI in NA of Sharp Co.
1,600
Cost of Goods Sold
10,000
Deferral of this year’s unrealized profits on inventory transfers
Sales
57,000
Cost of Goods Sold
44,000
Inventory
13,000
(See Problem 6-34 for unrealized profit calculations.)
