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Penny Manufacturing Company acquired 75 percent of Saul Corporation stock at underlying book value. At the date of acquisition, the fair value of the noncontrolling interest was equal to 25 percent of Saul’s book value. The balance sheets of the two companies for January 1, 20X1, are as follows: On January 2, 20X1, Penny purchased an additional 2,500 shares of common stock directly from Saul for $150,000. Required: a. Prepare the consolidation entry needed to complete a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny. b. Prepare a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny.

Penny Manufacturing Company acquired 75 percent of Saul Corporation stock at underlying book value. At the date of acquisition, the fair value of the noncontrolling interest was equal to 25 percent of Saul’s book value. The balance sheets of the two companies for January 1, 20X1, are as follows: On January 2, 20X1, Penny purchased an additional 2,500 shares of common stock directly from Saul for $150,000. Required: a. Prepare the consolidation entry needed to complete a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny. b. Prepare a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny.

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter9: Metric-analysis Of Financial Statements
Section: Chapter Questions
Problem 9.23E: Unusual income statement items Assume that the amount of each of the following items is material to...
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Penny Manufacturing Company acquired 75 percent of Saul Corporation stock at underlying book value. At the date of acquisition, the fair value of the noncontrolling interest was equal to 25 percent of Saul’s book value. The balance sheets of the two companies for January 1, 20X1, are as follows:

On January 2, 20X1, Penny purchased an additional 2,500 shares of common stock directly from Saul for $150,000.
 
Required:
a. Prepare the consolidation entry needed to complete a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny. 

b. Prepare a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny. 

PENNY MANUFACTURING CORPORATION Balance Sheet January 1, 20X1 $ 235,500 74,000 108,000 607,000 (134,000) Retained Earnings 246,000 $1,136,500 $ 130,500 391,000 187,000 37,000 391,000 Accounts Payable Bonds Payable Cash Accounts Receivable Common Stock Inventory Buildings & Equipment Less: Accumulated Depreciation Investment in Saul Corporation Additional Paid-In Capital Total Assets Total Liabilities & Equities $1,136,500 SAUL CORPORATION Balance Sheet January 1, 20X1 $ 75,000 114,000 188,000 607,000 (226,000) Retained Earnings $ 758,000 Total Liabilities & Equities Accounts Payable Bonds Payable Common Stock ($10 par) Additional Paid-In Capital Cash $139,000 291,000 100,000 37,000 191,000 Accounts Receivable Inventory Buildings & Equipment Less: Accumulated Depreciation Total Assets $758,000
Transcribed Image Text:PENNY MANUFACTURING CORPORATION Balance Sheet January 1, 20X1 $ 235,500 74,000 108,000 607,000 (134,000) Retained Earnings 246,000 $1,136,500 $ 130,500 391,000 187,000 37,000 391,000 Accounts Payable Bonds Payable Cash Accounts Receivable Common Stock Inventory Buildings & Equipment Less: Accumulated Depreciation Investment in Saul Corporation Additional Paid-In Capital Total Assets Total Liabilities & Equities $1,136,500 SAUL CORPORATION Balance Sheet January 1, 20X1 $ 75,000 114,000 188,000 607,000 (226,000) Retained Earnings $ 758,000 Total Liabilities & Equities Accounts Payable Bonds Payable Common Stock ($10 par) Additional Paid-In Capital Cash $139,000 291,000 100,000 37,000 191,000 Accounts Receivable Inventory Buildings & Equipment Less: Accumulated Depreciation Total Assets $758,000
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