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In: Accounting

Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20X1, for $152,000....

Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20X1, for $152,000. On that date, the fair value of the noncontrolling interest was $38,000, and Slice reported retained earnings of $43,000 and had $99,000 of common stock outstanding. Pizza has used the equity method in accounting for its investment in Slice.

Trial balance data for the two companies on December 31, 20X5, are as follows:
  

Pizza
Corporation
Slice
Products Company
Item Debit Credit Debit Credit
Cash & Receivables $ 84,000 $ 84,000
Inventory 274,000 92,000
Land 81,000 81,000
Buildings & Equipment 505,000 164,000
Investment in Slice Products Company 188,320
Cost of Goods Sold 116,000 43,000
Depreciation Expense 21,000 11,000
Inventory Losses 11,000 6,000
Dividends Declared 45,000 23,600
Accumulated Depreciation $ 191,000 $ 77,000
Accounts Payable 42,000 15,000
Notes Payable 262,560 117,600
Common Stock 286,000 99,000
Retained Earnings 300,000 89,000
Sales 210,000 107,000
Income from Slice Products Company 33,760
$ 1,325,320 $ 1,325,320 $ 504,600 $ 504,600


Additional Information

  1. On the date of combination, the fair value of Slice's depreciable assets was $48,000 more than book value. The accumulated depreciation on these assets was $10,000 on the acquisition date. The differential assigned to depreciable assets should be written off over the following 10-year period.
  2. There was $13,000 of intercorporate receivables and payables at the end of 20X5.

Required:
a. Prepare all journal entries that Pizza recorded during 20X5 related to its investment in Slice. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. Prepare all consolidation entries needed to prepare consolidated statements for 20X5. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

c. Prepare a three-part worksheet as of December 31, 20X5. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)

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