Page 574 - Accounting Principles (A Business Perspective)

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P S Elimination Consolidated
Income Statement Company Company Debit Credit Amounts
Revenue from sales 397,000 303,000 700,000
Income of S 20,000 (1) 20,000
Company
Cost of goods sold (250,000) (180,000) (430,000)
Expenses (excluding (100,000) (80,000) (180,000)
depreciation and
taxes)
Depreciation expense (7,400) (5,000) (12,400)
Federal income tax (28,600) (18,000) (46,000)
expense
Net income, carried 31,000 20,000 31,000*
forward

Statement of
Retained Earnings
Retained earnings –
January 1:
P Company 54,000 54,000
S Company 6,000 (3) 6,000
Net income brought 31,000 20,000 31,000*
forward
85,000 26,000 85,000*
Dividends:
P Company (10,000) (10,000)
S Company (8,000) (2) 8,000
Retained earnings – 75,000 18,000 75,000*
Dec. 31 carried
forward

Balance sheet assets
Cash 38,000 16,000 54,000
Notes receivable 5,000 (4) 5,000
Accounts receivable, 25,000 18,000 43,000
net
Merchandise 40,000 36,000 76,000
inventory
Investment in S 133,000 (2) 8,000 (3) 121,000
Company
(1) 20,000
Equipment, net 35,900 12,000 48,900
Building, net 61,700 33,000 94,700
Land 20,000 10,000 (3) 4,000 34,000
Goodwill (3) 11,000 11,000
359,600 125,000 361,600*
Liabilities and
stockholders' equity
Accounts payable 19,600 2,000 21,600

Accounting Principles: A Business Perspective 575 A Global Text