Prepare the consolidated adjusting entries

Assignment Help Accounting Basics

Reference no: EM132732844

Question -

a. Calbear Co. acquired 100% of Stanford Co. on January 1, 2020.

b. Stanford uses the equity method for accounting for its investment in Stanford.

c. The individual company information for Calbear Co. and Stanford Co. is presented in the two columns on the left side of what will be your consolidation Worksheet.

d. Calbear Co. paid $558,000 for its 100% interest in Stanford Co.

e. The book value of Calbear Co. on January 1, 2020 was $320,000.

f. Stanford Co. had a patent with a fair market value $94,000 greater than its book value. The patent had a four-year remaining life. The remainder of the price paid over book value was considered goodwill.

g. Stanford's books and records show net income of $100,000 in both 2020 and 2021.

h. Stanford declared no dividend in 2020. Stanford Co. declared an $80,000 dividend in 2021.

i. At December 31, 2021, Stanford Co. owed Calbear Co. $100,000.

j. During 2021 Stanford Co. sold inventory to Calbear at a sales price of $100,000.

k. At December 31, 2020, Stanford Co. had sold inventory to Calbear Co. which remained in Calbear's inventory. That inventory had a profit margin of $4500. At December 31, 2021, Stanford Co. had sold inventory to Calbear Co. which remained in Calbear's inventory. That inventory had a profit margin of $6000.

Required - Prepare the consolidated adjusting entries and complete the consolidation workpapers.

Reference no: EM132732844

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