Wealthy Manufacturing Company purchased 30 percent of the voting shares of Diversified Products Corporation on March...

Wealthy Manufacturing Company purchased 30 percent of the voting shares of Diversified Products Corporation on March 23, 20X4. On December 31, 20X8, Wealthy Manufacturing’s controller attempted to prepare income statements and retained earnings statements for the two companies using the following summarized 20X8 data:

	Wealthy Manufacturing		Diversified Products
Net Sales	$	865,000	$	405,000
Cost of Goods Sold		670,000		305,000
Other Expenses		96,000		40,000
Dividends Declared & Paid		46,000		26,000
Retained Earnings, 1/1/X8		434,000		269,000

Wealthy Manufacturing uses the equity method in accounting for its investment in Diversified Products. The controller was also aware of the following specific transactions for Diversified Products in 20X8, which were not included in the preceding data:

Diversified sold its entire Health Technologies division on September 30, 20X8, for $377,000. The book value of Health Technologies division’s net assets on that date was $329,000. The division incurred an operating loss of $18,000 in the first nine months of 20X8.
During 20X8, Diversified sold one of its delivery trucks after it was involved in an accident and recorded a gain of $20,000.

Required:
Prepare an income statement and retained earnings statement for Wealthy Manufacturing for 20X8.

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ekkarill92 answered 1 year ago

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