Reference no: EM133059494
Question - The separate trial balance Thanos SA and Merry SA, its 90% owned subsidiary, for the year ended 2014 is as follows:
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Debits
|
Thanos SA
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Merry SA
|
|
Cash
|
$700
|
$600
|
|
Accounts receivable
|
1,000
|
400
|
|
Interest receivable
|
0
|
25
|
|
Inventory
|
1,100
|
700
|
|
Land
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1,900
|
800
|
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Equipment-net
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1,100
|
1,400
|
|
Building-net
|
2,000
|
1,400
|
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Investment in Thanos SA bonds
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0
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460
|
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Investment in Merry SA
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3,600
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0
|
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Cost of sales
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2,800
|
2,400
|
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Interest expense
|
100
|
0
|
|
Other expenses
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1,100
|
700
|
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Dividends
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300
|
100
|
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Total
|
$15,700
|
$8,985
|
|
|
|
|
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Credits
|
Thanos SA
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Merry SA
|
|
Accounts payable
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$1,300
|
$1,000
|
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Interest payable
|
50
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0
|
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10% bonds payable
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1,000
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0
|
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Common stock
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5,000
|
2,000
|
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Retained Earnings
|
3,380
|
2,085
|
|
Sales
|
4,800
|
3,700
|
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Gain on sale of land
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0
|
200
|
|
Gain on sale of equipment
|
100
|
0
|
|
Interest income
|
70
|
0
|
|
Total
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$15,700
|
$8,985
|
ADDITIONAL INFORMATION -
1. Thanos SA acquired Merry SA when the book value of its net identifiable assets equaled the fair value.
2. Intercompany merchandise sale during 2014 by Thanos SA to Merry SA was $800,000 while unrealized profit of $100,000 remained in the ending inventory.
3. Thanos SA purchased land from Merry SA with book value of $800,000 for $1,000,000 in 2014. Thanos SA holds the land until 2015.
4. Merry SA purchased equipment from Thanos SA for $700,000 on December 31, 2014. The gain from selling this equipment was $100,000.
5. On January 1, 2014, Merry SA purchased half of Thanos SA's 10 percent outstanding bonds that were originally issued at par for $440,000. The bonds will mature on January 1, 2017. The bonds paid interest every January 1 and July 1.
Required - Prepare journals and consolidation workpapers for Thanos SA and subsidiary for the year ended December 31, 2014.
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