In Transit Items
On July 31, 2011, Ping Company purchased 90% of Santos Company”s common stock for $2,010,000 cash. Immediately after the acquisition, the two companies” balance sheets were as follows:
|
Ping |
Santas |
|
|
Cash |
$ 320,000 |
$ 150,000 |
|
Accounts receivable |
600,000 |
300,000 |
|
Note receivable |
100,000 |
0 |
|
Inventory |
1,840,000 |
400,000 |
|
Advance to Santos Company |
60,000 |
0 |
|
Investment in Santos Company |
2,010,000 |
0 |
|
Plant and equipment (net) |
3,000,000 |
1,500,000 |
|
Land |
90,000 |
90,000 |
|
Total |
$8,020,000 |
$2,440,000 |
|
Accounts payable |
$ 800,000 |
$ 140,000 |
|
Notes payable |
900,000 |
100,000 |
|
Common stock |
2,400,000 |
900,000 |
|
Other contributed capital |
2,200,000 |
680,000 |
|
Retained earnings |
1,720,000 |
620,000 |
|
Total |
$8,020,000 |
$2,440,000 |
Santos Company has not yet recorded the $60,000 cash advance from Ping Company. Ping Company”s accounts receivable include $20,000 due from Santos Company. Santos Company”s $100,000 note payable is payable to Ping Company. Neither company has recorded $7,000 of interest accrued on the note from January 1 to July 31. Any difference between book value and the value implied by the purchase price relates to land.
Required:
Prepare a consolidated balance sheet workpaper on July 31, 2011.