70%, cost method worksheet, several adjustments, third year. Refer to the preceding information for Pcraft’s acquisition of Sailair’s common stock. Assume that Pcraft paid $400,000 for 70% of Sailair common stock. Pcraft uses the cost method to account for its investment in Sailair. Pcraft and Sailair had the following trial balances on December 31, 20X3:
|
Pcraft |
Sailair |
|
|
Cash |
177,000 |
60,000 |
|
Accounts Receivable |
90,000 |
55,000 |
|
Inventory |
120,000 |
86,000 |
|
Land |
100,000 |
60,000 |
|
Investment in Sailair |
400,000 |
|
|
Buildings |
800,000 |
300,000 |
|
Accumulated Depreciation |
220,000 |
80,000 |
|
Equipment |
150,000 |
100,000 |
|
Accumulated Depreciation |
90,000 |
72,000 |
|
Current Liabilities |
60,000 |
102,000 |
|
Bonds Payable |
100,000 |
|
|
Common Stock |
100,000 |
10,000 |
|
Paid In Capital in Excess of Par |
900,000 |
90,000 |
|
Retained Earnings, Jan 1, 20X3 |
315,000 |
182,000 |
|
Sales |
800,000 |
350,000 |
|
Cost of Goods Sold |
450,000 |
210,000 |
|
Depreciation Expense—Buildings |
30,000 |
15,000 |
|
Depreciation Expense—Equipment |
15,000 |
14,000 |
|
Other Expenses |
140,000 |
68,000 |
|
Interest Expense |
8,000 |
|
|
Dividend Income |
7,000 |
|
|
Dividends Declared |
20,000 |
10,000 |
|
Totals |
0 |
0 |
Required
1. Prepare a zone analysis and a determination and distribution of excess schedule for the investment in Sailair.
2. Complete a consolidated worksheet for Pcraft Corporation and its subsidiary Sailair Corporation as of December 31, 20X3. Prepare supporting amortization and income distribution schedules.