Cma Assignment
DELTA COMPANY 1) Acquisition Cost $400,000
Consolidating Work Sheet Book Value at date of Acquisition 160,000
December 31, 19x3 Excess of Acquisition Cost over Book Value $240,000 Account Title Delta Company Alpha Company Eliminating Entries Consolidated 3) Goodwill = 40 years Debits Credits Trial Balance $240,000 - 40 years
Inventory $200,000 $50,000 (5) $4,000 $246,000 $6,000 per year
Other Current Assets 400,000 200,000 600,000
Plant Assets (Net) 1,000,000 400,000 (2) $40,000 1,440,000 4) Asset Value increase $40,000
Investment in Alpha Company 400,000 (2) 400,000 - Depreciation (years) 20
Investment in Alpha Bonds 100,000 (7) 100,000 - Depreciation per year $2,000
Cost of Goods Sold 4,000,000 800,000 (5) 76,000 (6) 5,000 4,719,000 5) Let x = cost and 0.25x = profit
Depreciation Expense 200,000 50,000 (4) 4,000 246,000 x + 0.25x = 1.25x (selling price)
Interest Expense 40,000 40,000 Profit ratio = 0.25x
Other Expense 600,000 80,000 680,000 1.25x
Current Liabilities (300,000) (300,000) Profit ratio = 20%
Bonds Payable (500,000) (7) 100,000 (400,000)
Sales (5,500,000) (980,000) (5) 80,000 (6,400,000) Profit to be eliminated is determined as follows:
Interest Income (8,000) (7) 8,000 - Ending inventory at selling price $20,000
Paid-In Capital - Delta (100,000) (100,000) x Profit Ratio 20%
Paid-In Capital - Alpha (40,000) (2) 40,000 - Profit to be eliminated from ending inventory $4,000
Retained Earnings - Delta (992,000) (1) 20,000 (3) 12,000 6) Beginning inventory at selling price $25,000 (4) 4,000 x Profit ratio 20% (6) 5,000
Consolidating Work Sheet Book Value at date of Acquisition 160,000
December 31, 19x3 Excess of Acquisition Cost over Book Value $240,000 Account Title Delta Company Alpha Company Eliminating Entries Consolidated 3) Goodwill = 40 years Debits Credits Trial Balance $240,000 - 40 years
Inventory $200,000 $50,000 (5) $4,000 $246,000 $6,000 per year
Other Current Assets 400,000 200,000 600,000
Plant Assets (Net) 1,000,000 400,000 (2) $40,000 1,440,000 4) Asset Value increase $40,000
Investment in Alpha Company 400,000 (2) 400,000 - Depreciation (years) 20
Investment in Alpha Bonds 100,000 (7) 100,000 - Depreciation per year $2,000
Cost of Goods Sold 4,000,000 800,000 (5) 76,000 (6) 5,000 4,719,000 5) Let x = cost and 0.25x = profit
Depreciation Expense 200,000 50,000 (4) 4,000 246,000 x + 0.25x = 1.25x (selling price)
Interest Expense 40,000 40,000 Profit ratio = 0.25x
Other Expense 600,000 80,000 680,000 1.25x
Current Liabilities (300,000) (300,000) Profit ratio = 20%
Bonds Payable (500,000) (7) 100,000 (400,000)
Sales (5,500,000) (980,000) (5) 80,000 (6,400,000) Profit to be eliminated is determined as follows:
Interest Income (8,000) (7) 8,000 - Ending inventory at selling price $20,000
Paid-In Capital - Delta (100,000) (100,000) x Profit Ratio 20%
Paid-In Capital - Alpha (40,000) (2) 40,000 - Profit to be eliminated from ending inventory $4,000
Retained Earnings - Delta (992,000) (1) 20,000 (3) 12,000 6) Beginning inventory at selling price $25,000 (4) 4,000 x Profit ratio 20% (6) 5,000