AMIS 4200 Chapter 1 - cpb-us-w2.wpmucdn.com€¦ · 12/31/20x7 Sales 675 100 Cost of Sales 500 10...
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Before Creation Parent Sub Adjustments Consolidated 12/31/20x1 Revenue 900 900 Expenses 830 830 Net Income/Loss 70 70 Retained Earnings, beg. 30 30 Net Income/Loss 70 70 Dividends Paid Retained Earnings, end 100 100 Cash 300 300 Other Assets 200 200 Investment in Sub. Liabilities 150 150 Paid-In Capital Accts 250 250 Retained Earnings, end 100 100 500 500 500 500 AMIS 4200 Chapter 1 David E. Wallin Page 1 of 23 Copyright 2014 All rights reserved
Transcript of AMIS 4200 Chapter 1 - cpb-us-w2.wpmucdn.com€¦ · 12/31/20x7 Sales 675 100 Cost of Sales 500 10...
Before Creation Parent Sub Adjustments Consolidated12/31/20x1Revenue 900 900Expenses 830 830
Net Income/Loss 70 70
Retained Earnings, beg. 30 30Net Income/Loss 70 70Dividends PaidRetained Earnings, end 100 100
Cash 300 300Other Assets 200 200Investment in Sub.
Liabilities 150 150Paid-In Capital Accts 250 250Retained Earnings, end 100 100
500 500 500 500
AMIS 4200 Chapter 1
David E. Wallin Page 1 of 23 Copyright 2014 All rights reserved
At Creation Parent Sub Adjustments Consolidated12/31/20x1Revenue 900Expenses 830
Net Income/Loss 70
Retained Earnings, beg. 30Net Income/Loss 70Dividends PaidRetained Earnings, end 100
Cash 60 240Other Assets 200Investment in Sub. 240
Liabilities 150Paid-In Capital Accts 250 240Retained Earnings, end 100
500 500 240 240
AMIS 4200 Chapter 1
David E. Wallin Page 2 of 23 Copyright 2014 All rights reserved
End 1st Year/Equity Parent Sub Adjustments Consolidated12/31/x2---No Sub Divs.Revenue 970 220Expenses 845 160Eq. in Net Inc. of Sub. 60Net Income/Loss 185 60
Retained Earnings, beg. 100Net Income/Loss 185 60Dividends Paid 40Retained Earnings, end 245 60
Cash 145 300Other Assets 200Investment in Sub. 300
Liabilities 150Paid-In Capital Accts 250 240Retained Earnings, end 245 60
645 645 300 300
AMIS 4200 Chapter 1
David E. Wallin Page 3 of 23 Copyright 2014 All rights reserved
End 1st Year/Equity Parent Sub Adjustments Consolidated12/31/x2---Sub has Divs.Revenue 970 220Expenses 845 160Eq. in Net Inc. of Sub. 60Net Income/Loss 185 60
Retained Earnings, beg. 100Net Income/Loss 185 60Dividends Paid 40 25Retained Earnings, end 245 35
Cash 170 275Other Assets 200Investment in Sub. 275
Liabilities 150Paid-In Capital Accts 250 240Retained Earnings, end 245 35
645 645 275 275
This replaces previous page as Sub now has dividends.
AMIS 4200 Chapter 1
David E. Wallin Page 4 of 23 Copyright 2014 All rights reserved
End 1st Year/Cost Parent Sub Adjustments Consolidated12/31/x2---No Sub Divs.Revenue 970 220Expenses 845 160Dividend Income 0Net Income/Loss 125 60
Retained Earnings, beg. 100Net Income/Loss 125 60Dividends Paid 40Retained Earnings, end 185 60
Cash 145 300Other Assets 200Investment in Sub. 240
Liabilities 150Paid-In Capital Accts 250 240Retained Earnings, end 185 60
585 585 300 300
AMIS 4200 Chapter 1
David E. Wallin Page 5 of 23 Copyright 2014 All rights reserved
End 1st Year/Cost Parent Sub Adjustments Consolidated12/31/x2---Sub has Divs.Revenue 970 220Expenses 845 160Dividend Income 25Net Income/Loss 150 60
Retained Earnings, beg. 100Net Income/Loss 150 60Dividends Paid 40 25Retained Earnings, end 210 35
Cash 170 275Other Assets 200Investment in Sub. 240
Liabilities 150Paid-In Capital Accts 250 240Retained Earnings, end 210 35
610 610 275 275
This replaces previous page as Sub now has dividends.
AMIS 4200 Chapter 1
David E. Wallin Page 6 of 23 Copyright 2014 All rights reserved
End 2nd Year/Equity Parent Sub Adjustments Consolidated12/31/x3---Sub has Divs.Revenue 1000 300Expenses 870 210Eq. in Net Inc. of Sub. 90Net Income/Loss 220 90
Retained Earnings, beg. 245 35Net Income/Loss 220 90Dividends Paid 47Retained Earnings, end 465 78
Cash 347 318Other Assets 200Investment in Sub. 318
Liabilities 150Paid-In Capital Accts 250 240Retained Earnings, end 465 78
865 865 318 318
AMIS 4200 Chapter 1
David E. Wallin Page 7 of 23 Copyright 2014 All rights reserved
End 2nd Year/Cost Parent Sub Adjustments Consolidated12/31/x3---Sub has Divs.Revenue 1000 300Expenses 870 210Dividend Income 47Net Income/Loss 177 90
Retained Earnings, beg. 210 35Net Income/Loss 177 90Dividends Paid 47Retained Earnings, end 387 78
Cash 347 318Other Assets 200Investment in Sub. 240
Liabilities 150Paid-In Capital Accts 250 240Retained Earnings, end 387 78
787 787 318 318
AMIS 4200 Chapter 1
David E. Wallin Page 8 of 23 Copyright 2014 All rights reserved
At Creation Parent Sub Adjustments Consolidated12/31/20x1Revenue 900 900Expenses 830 830
Net Income/Loss 70 70
Retained Earnings, beg. 30 30Net Income/Loss 70 70Dividends PaidRetained Earnings, end 100 100
Cash 60 240 300Other Assets 200 200Investment in Sub. 240 240
Liabilities 150 150Paid-In Capital Accts 250 240 240 250Retained Earnings, end 100 100
500 500 240 240 240 240 500 500
AMIS 4200 Chapter 1
David E. Wallin Page 9 of 23 Copyright 2014 All rights reserved
End 1st Year/Equity Parent Sub Adjustments Consolidated12/31/x2---No Sub Divs.Revenue 970 220 1190Expenses 845 160 1005Eq. in Net Inc. of Sub. 60 60
Net Income/Loss 185 60 60 0 185
Retained Earnings, beg. 100 100Net Income/Loss 185 60 60 0 185Dividends Paid 40 40Retained Earnings, end 245 60 60 0 245
Cash 145 300 445Other Assets 200 200Investment in Sub. 300 240
60
Liabilities 150 150Paid-In Capital Accts 250 240 240 250Retained Earnings, end 245 60 60 0 245
645 645 300 300 300 300 645 645
AMIS 4200 Chapter 1
David E. Wallin Page 10 of 23 Copyright 2014 All rights reserved
End 1st Year/Equity Parent Sub Adjustments Consolidated12/31/x2---Sub has Divs.Revenue 970 220 1190Expenses 845 160 1005Eq. in Net Inc. of Sub. 60 60
Net Income/Loss 185 60 60 0 185
Retained Earnings, beg. 100 100Net Income/Loss 185 60 60 0 185Dividends Paid 40 25 25 40Retained Earnings, end 245 35 60 25 245
Cash 170 275 445Other Assets 200 200Investment in Sub. 275 25 240
60
Liabilities 150 150Paid-In Capital Accts 250 240 240 250Retained Earnings, end 245 35 60 25 245
645 645 275 275 325 325 645 645
AMIS 4200 Chapter 1
David E. Wallin Page 11 of 23 Copyright 2014 All rights reserved
End 1st Year/Cost Parent Sub Adjustments Consolidated12/31/x2---No Sub Divs.Revenue 970 220 1190Expenses 845 160 1005Dividend Income 0Net Income/Loss 125 60 185
Retained Earnings, beg. 100 100Net Income/Loss 125 60 185Dividends Paid 40 40Retained Earnings, end 185 60 245
Cash 145 300 445Other Assets 200 200Investment in Sub. 240 240
Liabilities 150 150Paid-In Capital Accts 250 240 240 250Retained Earnings, end 185 60 245
585 585 300 300 240 240 645 645
AMIS 4200 Chapter 1
David E. Wallin Page 12 of 23 Copyright 2014 All rights reserved
End 1st Year/Cost Parent Sub Adjustments Consolidated12/31/x2---Sub has Divs.Revenue 970 220 1190Expenses 845 160 1005Dividend Income 25 25
Net Income/Loss 150 60 25 0 185
Retained Earnings, beg. 100 100Net Income/Loss 150 60 25 0 185Dividends Paid 40 25 25 40Retained Earnings, end 210 35 25 25 245
Cash 170 275 445Other Assets 200 200Investment in Sub. 240 240
Liabilities 150 150Paid-In Capital Accts 250 240 240 250Retained Earnings, end 210 35 25 25 245
610 610 275 275 265 265 645 645
AMIS 4200 Chapter 1
David E. Wallin Page 13 of 23 Copyright 2014 All rights reserved
End 2nd Year/Equity Parent Sub Adjustments Consolidated12/31/x3---Sub has Divs.Revenue 1000 300 1300Expenses 870 210 1080Eq. in Net Inc. of Sub. 90 90
Net Income/Loss 220 90 90 0 220
Retained Earnings, beg. 245 35 35 245Net Income/Loss 220 90 90 0 220Dividends Paid 47 47
Retained Earnings, end 465 78 125 47 465
Cash 347 318 665Other Assets 200 200Investment in Sub. 318 275
43
Liabilities 150 150Paid-In Capital Accts 250 240 240 250Retained Earnings, end 465 78 125 47 465
865 865 318 318 365 365 865 865
AMIS 4200 Chapter 1
David E. Wallin Page 14 of 23 Copyright 2014 All rights reserved
End 2nd Year/Cost Parent Sub Adjustments Consolidated12/31/x3---Sub has Divs.Revenue 1000 300 1300Expenses 870 210 1080Dividend Income 47 47
Net Income/Loss 177 90 47 0 220
Retained Earnings, beg. 210 35 245Net Income/Loss 177 90 47 0 220Dividends Paid 47 47
Retained Earnings, end 387 78 47 47 465
Cash 347 318 665Other Assets 200 200Investment in Sub. 240 240
Liabilities 150 150Paid-In Capital Accts 250 240 240 250Retained Earnings, end 387 78 47 47 465
787 787 318 318 287 287 865 865
AMIS 4200 Chapter 1
David E. Wallin Page 15 of 23 Copyright 2014 All rights reserved
Below is a partially completed worksheet for Parent and a 100% owned Sub that was created many years ago. Parent uses the cost method to account for Sub.
Required: Complete the worksheet.
Study Problem 1 Parent Sub Adjustments Consolidated
12/31/20x2
Sales 800 300
Cost of Sales 220 200
Expenses 400 70
Dividend Income 15
Net Income/Loss 195 30
Retained Earnings, beg. 300 80
Net Income/Loss 195 30
Dividends Paid 70 15
Retained Earnings, end 425 95
Cash 95 40
A/R 40 60
Inventory 60 45
Prop., Plant, & Equip. 500 200
Accum. Depreciation 340 50
Investment in Sub. 100
Payables & Accruals 20 30
Long-term Debt 70
Common Stock 10 100
Retained Earnings, end 425 95
795 795 345 345
AMIS 4200 Chapter 1
David E. Wallin Page 16 of 23 Copyright 2014 All rights reserved
Now, present a worksheet as it would look if the Parent had been using the equity method all along to account for Sub. There are missing amounts for Parent.
Study Problem 1 Parent Sub Adjustments Consolidated
12/31/20x2
Sales 800 300
Cost of Sales 220 200
Expenses 400 70
Net Income/Loss
Retained Earnings, beg.
Net Income/Loss
Dividends Paid 70 15
Retained Earnings, end
Cash 95 40
A/R 40 60
Inventory 60 45
Prop., Plant, & Equip. 500 200
Accum. Depreciation 340 50
Investment in Sub.
Payables & Accruals 20 30
Long-term Debt 70
Common Stock 10 100
Retained Earnings, end
AMIS 4200 Chapter 1
David E. Wallin Page 17 of 23 Copyright 2014 All rights reserved
Below is a partially completed worksheet for Parent and a 100% owned Sub that was created many years ago. Parent uses the equity method to account for Sub.
Required: Complete the worksheet.
Study Problem 2 Parent Sub Adjustments Consolidated
12/31/20x7
Sales 675 100
Cost of Sales 500 10
Expenses 200 70
Equity in NI of Sub 20
Net Income/Loss 5 20
Retained Earnings, beg. 460 240
Net Income/Loss 5 20
Dividends Paid 22 8
Retained Earnings, end 433 252
Cash 97 120
A/R 40 55
Inventory 60 12
Prop., Plant, & Equip. 400 305
Accum. Depreciation 140 200
Investment in Sub. 272
Payables & Accruals 56 20
Long-term Debt 140
Common Stock 100 20
Retained Earnings, end 433 252
869 869 492 492
AMIS 4200 Chapter 1
David E. Wallin Page 18 of 23 Copyright 2014 All rights reserved
Now, present a worksheet as it would look if the Parent had been using the cost method all along to account for Sub. There are missing amounts for Parent.
Study Problem 2 Parent Sub Adjustments Consolidated
12/31/20x7
Sales 675 100
Cost of Sales 500 10
Expenses 200 70
Net Income/Loss
Retained Earnings, beg.
Net Income/Loss
Dividends Paid 22 8
Retained Earnings, end
Cash 97 120
A/R 40 55
Inventory 60 12
Prop., Plant, & Equip. 400 305
Accum. Depreciation 140 200
Investment in Sub.
Payables & Accruals 56 20
Long-term Debt 140
Common Stock 100 20
Retained Earnings, end
AMIS 4200 Chapter 1
David E. Wallin Page 19 of 23 Copyright 2014 All rights reserved
Study Problem 1 Parent Sub Adjustments Consolidated12/31/20x2Sales 800 300 1100Cost of Sales 220 200 420Expenses 400 70 470Dividend Income 15 15
Net Income/Loss 195 30 15 0 210
Retained Earnings, beg. 300 80 380Net Income/Loss 195 30 15 0 210Dividends Paid 70 15 15 70Retained Earnings, end 425 95 15 15 520
Cash 95 40 135A/R 40 60 100Inventory 60 45 105Prop., Plant, & Equip. 500 200 700Accum. Depreciation 340 50 390Investment in Sub. 100 100
Payables & Accruals 20 30 50Long-term Debt 70 70Common Stock 10 100 100 10Retained Earnings, end 425 95 15 15 520
795 795 345 345 115 115 1040 1040
AMIS 4200 Chapter 1
David E. Wallin Page 20 of 23 Copyright 2014 All rights reserved
Study Problem 1 Parent Sub Adjustments Consolidated12/31/20x2Sales 800 300 1100Cost of Sales 220 200 420Expenses 400 70 470Equity in NI of Sub 30 30
Net Income/Loss 210 30 30 0 210
Retained Earnings, beg. 380 80 80 380Net Income/Loss 210 30 30 0 210Dividends Paid 70 15 15 70Retained Earnings, end 520 95 110 15 520
Cash 95 40 135A/R 40 60 100Inventory 60 45 105Prop., Plant, & Equip. 500 200 700Accum. Depreciation 340 50 390Investment in Sub. 195 180
15
Payables & Accruals 20 30 50Long-term Debt 70 70Common Stock 10 100 100 10Retained Earnings, end 520 95 110 15 520
890 890 345 345 210 210 1040 1040
AMIS 4200 Chapter 1
David E. Wallin Page 21 of 23 Copyright 2014 All rights reserved
Study Problem 2 Parent Sub Adjustments Consolidated12/31/20x7Sales 675 100 775Cost of Sales 500 10 510Expenses 200 70 270Equity in NI of Sub 20 20
Net Income/Loss 5 20 20 0 5
Retained Earnings, beg. 460 240 240 460Net Income/Loss 5 20 20 0 5Dividends Paid 22 8 8 22Retained Earnings, end 433 252 260 8 433
Cash 97 120 217A/R 40 55 95Inventory 60 12 72Prop., Plant, & Equip. 400 305 705Accum. Depreciation 140 200 340Investment in Sub. 272 260
12
Payables & Accruals 56 20 76Long-term Debt 140 140Common Stock 100 20 20 100Retained Earnings, end 433 252 260 8 433
869 869 492 492 280 280 1089 1089
AMIS 4200 Chapter 1
David E. Wallin Page 22 of 23 Copyright 2014 All rights reserved
Study Problem 2 Parent Sub Adjustments Consolidated12/31/20x7Sales 675 100 775Cost of Sales 500 10 510Expenses 200 70 270Dividend Income 8 8
Net Income/Loss 17 20 8 0 5
Retained Earnings, beg. 220 240 460Net Income/Loss 17 20 8 0 5Dividends Paid 22 8 8 22Retained Earnings, end 181 252 8 8 433
Cash 97 120 217A/R 40 55 95Inventory 60 12 72Prop., Plant, & Equip. 400 305 705Accum. Depreciation 140 200 340Investment in Sub. 20 20
Payables & Accruals 56 20 76Long-term Debt 140 140Common Stock 100 20 20 100Retained Earnings, end 181 252 8 8 433
617 617 492 492 28 28 1089 1089
AMIS 4200 Chapter 1
David E. Wallin Page 23 of 23 Copyright 2014 All rights reserved
