Question: The December 31, 2019, post-closing trial
The December 31, 2019, post-closing trial balances of Marley Corporation and its subsidiary, Foster Corporation, are as follows:
The following additional information is available:
a. Marley initially acquires 60% of the outstanding common stock of Foster in 2017. There is no difference between the cost and book value of the net assets acquired. As of December 31, 2019, the percentage owned is 90%. An analysis of the investment in Foster Corporation account is as follows:
*subsidiary income for 2019:
60% × $96,000 ............................... $57,600
30% × $96,000 × 33½% . . . ........... 09,600
Total . .............................................. $67,200
Foster net income is earned ratably during the year.
On December 15, 2019, Foster declares a cash dividend of $4 per share of common stock, payable to shareholders on January 7, 2020.
b. During 2019, Marley sells merchandise to Foster. Marley has a 25% gross profit, and the sale is made at $80,000. Foster’s inventory at December 31, 2019, includes merchandise purchased from Marley for $40,000.
c. On October 1, 2019, Marley sells excess equipment to Foster for $45,000. Data relating to this equipment are as follows:
book value on Marley’s records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $36,000
Method of depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Straight-line
Estimated remaining life on October 1, 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 years
d. Near the end of 2019, Foster reduces the balance of its intercompany account payable to zero by transferring $8,000 to Marley. This payment is still in transit on December 31, 2019.
Required
Prepare the worksheet necessary to produce the consolidated balance sheet of Marley Corporation and its subsidiary as of December 31, 2019. Include an analysis for Marley’s purchase of Foster common stock on September 1, 2019.
Transcribed Image Text:
Marley Corporation Foster Corporation 167,250 170,450 87,500 36,000 122,000 487,000 Cash 101,000 72,000 28,000 Accounts Receivable Notes Receivable. Dividends Receivable Inventories.. 68,000 252,000 (64,000) Property, Plant, and Equipment . Accumulated Depreciation . Investment in Foster Corporation . Accounts Payable Notes Payable.. Dividends Payable.. Common Stock ($10 par) Retained Earnings. (117,000) 248,800 (222,000) (79,000) (76,000) (89,000) (40,000) (100,000) (152,000) (400,000) (501,000) Totals.. Date Description Amount Acquired 6,000 shares... 60% of 2018 net income of $78,000. Acquired 3,000 shares... Subsidiary income for 2019 90% of dividends declared . December 31, 2017 $ 70,800 December 31, 2018 September 1, 2019 December 31, 2019 December 31, 2019 46,800 100,000 67,200* (36,000) $248,800 Investment balance, December 31, 2019...
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