On December 31, 20X8, Paragraph Corporation acquired 80 percent of Sentence Comp

Question

On December 31, 20X8, Paragraph Corporation acquired 80 percent of Sentence Company's common stock for $136,000. At the acquisition date, the book values and fair values of all of Sentence's assets and liabilities were equal. Paragraph uses the equity method in accounting for its investment. Balance sheet information provided by the companies at December 31, 20X8, immediately following the acquisition is as follows: Sentence Company 20,000 70,000 90,000 240,000 Paragraph Corporation Cash Accounts Receivable Inventory Fixed Assets (net) Investment in Sentence Co. $74,000 120,000 180,000 350,000 136,000 $860,000 $65,000 350,000 150,000 295,000 $860,000 $420,000 $30,000 220,000 90,000 80,000 $420,000 Total Debits Accounts Payable Notes Payable Common Stock Retained Earnings Total Credits Required: Prepare a consolidated balance sheet for Paragraph at December 31, 20X8

Explanation / Answer

paragraph Corporation and Subsidiary Consolidated Balance Sheet December 31, 20X8 (in thousands) Assets Cash ($74 + $20) $94 Accounts receivable ($120 + $70)                    190 Inventories ($180 + $90)                    270 Fixed Assets — net ($350 + $240)                    590 Total assets $1,144 Liabilities and Stockholders'’ Equity Liabilities: Accounts payable ($65 + $30) $95 Notes Payable ($350 + $220)                    570 Stockholders’ equity Common stock                    150 Retained earnings                    295 Noncontrolling interest ($90 + $80) x 20%                      34 Total liabilities and stockholders' equity $             1,144 Note: I have tried my best for correct solution and work , still you need any further help, please ask in comment and don’t forget to rate positively.

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