60.1K

Verified Solution

Link Copied!

On January $1,2024,$ Sledge had common stock of $$250,000$ and retained earnings of $$390,000.$ During that year, Sledge reported sales of $$260,000,$ cost of goods sold of $$135,000,$ and operating expenses of $$53,000.$

On January $1,2022,$ Percy, Incorporated, acquired $80$ percent of Sledge's outstanding voting stock. At that date, $$73,000$ of the acquisition$-$date fair value was assigned to unrecorded contracts $($with a $20-$year life$)$ and $$33,000$ to an undervalued building $($with a $10-$year remaining life$).$

In $2023,$ Sledge sold inventory costing $$16,800$ to Percy for $$28,000.$ Of this merchandise, Percy continued to hold $$7,000$ at year$-$end. During $2024,$ Sledge transferred inventory costing $$18,150$ to Percy for $$33,000.$ Percy still held half of these items at year$-$end.

On January $1,2023,$ Percy sold equipment to Sledge for $$18,500.$ This asset originally cost $$29,000$ but had a January $1,2023,$ book value of $$11,600.$ At the time of transfer, the equipment's remaining life was estimated to be five years.

Percy has properly applied the equity method to the investment in Sledge.

Required:

a$.$ Prepare worksheet entries to consolidate these two companies as of December $31,2024.$

b$.$ Compute the net income attributable to the noncontrolling interest for $2024.$

Answer is not complete.

Complete this question by entering your answers in the tabs below.

Required A

Required B

Prepare worksheet entries to consolidate these two companies as of December $31,2024.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

$\backslash$table$[[$No$,$Transaction,Accounts,,Debit,Credit$],[1,*$G$,$Retained earnings,$(2),2,800(,],[,,$Cost of goods sold,$2,,2,8000],[2,*$TA$,$Equipment,$2,10,500,],[,,$Investment in Sledge,$0,5,520$o$.,],[,,$Accumulated depreciation$-$Equipment,$0,,16,020],[3,$S$,$Common stock,$2,250,000$o$.,],[,,$Retained earnings,$2,387,200,],[,,$Investment in Sledge,$0,,509,760>],[,,$Noncontrolling interest in Sledge,$(2),,127,440>],[4,$A$,$Contracts,$2,65,7000,],[,,$Buidings,$2,26,400,],[,,$Investment in Sledge,$0,,73,680],[,,$Noncontrolling interest in Sledge,$0,,18,420],[5,$I,Equity in income of Sledge,$0,0*,],[,,$Investment in Sledge,$(,,0*],[,,,,,],[6,$E$,$Amortization expense,$2,3,650,],[,,$Depreciation expense,$0,3,300?,],[,,$Contracts,$>,,3,650],[,,$Buidings,$2,,3,300],[,,,,,],[7,$TI$,$Sales,$0,33,000,],[,,$Cost of goods sold,$(2),,33,000],[,,,,,],[8,$G$,$Cost of goods sold,$2,0*,],[,,$Inventory,$(),,0*],[,,,,,],[9,$ED$,$Accumulated depreciation$-$Equipment,$0,1,380$o$.,],[,,$Depreciation expense,$2,,1,380]]$

Answer & Explanation Solved by verified expert

See Answer