aimtobeacpa
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| Posted: 01 Oct 2010 at 00:54 | IP Logged
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The separate condensed balance sheets and
income statements of Purl Corp. and its wholly owned subsidiary, Scott Corp.,
are as follows:
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BALANCE SHEETS
December 31,
2010 |
|
|
Purl |
Scott |
|
Assets |
|
|
|
Current
assets: |
|
|
|
Cash |
$
80,000 |
$
60,000 |
|
Accounts receivable (net) |
140,000 |
25,000 |
|
Inventories |
90,000 |
50,000 |
|
Total current assets |
310,000 |
135,000 |
|
Property, plant, and equipment
(net) |
625,000 |
280,000 |
|
Investment in Scott (equity
method) |
400,000 |
— |
|
Total assets |
$1,335,000 |
$415,000 |
|
Liabilities
and Stockholders’ Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$
160,000 |
$
95,000 |
|
Accrued liabilities |
110,000 |
30,000 |
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Total current liabilities |
270,000 |
125,000 |
|
Stockholders’
equity: |
|
|
|
Common stock ($10 par) |
300,000 |
50,000 |
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Additional paid-in capital |
— |
10,000 |
|
Retained earnings |
765,000 |
230,000 |
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Total stockholders’ equity |
1,065,000 |
290,000 |
|
Total liabilities and stockholders’
equity |
$1,335,000 |
$415,000 |
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INCOME STATEMENTS
For the year ended December 31,
2010 |
|
|
Purl |
Scott |
|
Sales |
$2,000,000 |
$750,000 |
|
Cost of goods sold |
1,540,000 |
500,000 |
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Gross margin |
460,000 |
250,000 |
|
Operating expenses |
260,000 |
150,000 |
|
Operating income |
200,000 |
100,000 |
|
Equity in earnings of Scott |
70,000 |
— |
|
Income before income taxes |
270,000 |
100,000 |
|
Provision for income taxes |
60,000 |
30,000 |
|
Net
income |
$
210,000 |
$
70,000 |
Additional information:
• On
January 1, 2010, Purl purchased for $360,000 all of Scott's $10 par, voting common stock. On January 1, 2010, the fair value of Scott's
assets and liabilities equaled their carrying amount of $410,000 and $160,000,
respectively, except that the fair values of certain items identifiable in
Scott's inventory were $10,000 more than their carrying amounts. These items were still on hand at December
31, 2010. Goodwill is determined to be
unimpaired at December 31, 2010.
•
During 2010, Purl and Scott paid cash dividends of $100,000 and $30,000,
respectively. For tax purposes, Purl
receives the 100% exclusion for dividends received from
Scott.
•
There were no intercompany transactions, except for Purl's receipt of dividends from Scott and
Purl's recording of its share of
Scott's earnings.
• Both
Purl and Scott paid income taxes at the rate of 30%.
In the December 31, 2010, consolidated
financial statements of Purl and its subsidiary, total assets should be ans 1,460,000
can someone solve this??
__________________
BEC-74,82(lost credit),78
FAR-67,80
AUD-75
REG-68,72,79
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