Parent and Two Subsidiaries, Intercompany Notes
On January 2, 2011, Phillips Company purchased 80% of Sanchez Company and 90% of Thomas Company for $225,000 and $168,000, respectively. Immediately before the acquisitions, the balance sheets of the three companies were as follows:
|
Phillips |
Sanchez |
Thonws |
|
|
Cash |
$400,000 |
$ 43,700 |
$ 20,000 |
|
Accounts receivable |
28,000 |
24,000 |
20,000 |
|
Note receivable |
o |
10,000 |
0 |
|
Interest receivable |
o |
300 |
0 |
|
Inventory |
120,000 |
96,000 |
43,000 |
|
Equipment |
60,000 |
40,000 |
30,000 |
|
Land |
180,000 |
80,000 |
70,000 |
|
Total |
$788,000 |
$294,000 |
$183,000 |
|
Accounts payable |
$ 28,000 |
$ 20,000 |
$ 18,000 |
|
Note payable |
0 |
0 |
10,000 |
|
Common stock |
800,000 |
120,000 |
75,000 |
|
Other contributed capital |
300,000 |
90,000 |
40,000 |
|
Retained earnings |
160,000 |
64,000 |
40,000 |
|
Total |
$788,000 |
$294,000 |
$183,000 |
The note receivable and interest receivable of Sanchez relate to a loan made to Thomas Company on October 1, 2010. Thomas failed to record the accrued interest expense on the note.
Required:
Prepare a consolidated balance sheet workpaper as of January 2, 2011. Any difference between book value and the value implied by the purchase price relates to subsidiary land.