Intercompany Items, Two Subsidiaries

On February 1, 2011, Punto Company purchased 95% of the outstanding common stock of Sara Company and 85% of the outstanding common stock of Rob Company. Immediately before the two acquisitions, balance sheets of the three companies were as follows:

Â	Pun to	Sara	Rob
Cash	$165,000	$ 45,000	$17,000
Accounts receivable	35,000	35,000	26,000
Notes receivable	18,000	-0-	-0-
Merchandise inventory	106,000	35,500	14,000
Prepaid insurance	13,500	2,500	500
Advances to Sara Company	10,000	Â	Â
Advances to Rob Company	5,000	Â	Â
Land	248,000	43,000	15,000
Buildings (net)	100,000	27,000	16,000
Equipment (net)	35,000	10,000	2,500
Total	$735,500	$198,000	$91,000
Accounts payable	$ 25,500	$ 20,000	$10,500
Income taxes payable	30,000	10,000	-0-
Notes payable	-0-	6,000	10,500
Bonds payable	100,000	-0-	-0-
Common stock, $10 par value	300,000	144,000	42,000
Other contributed capital	150,000	12,000	38,000
Retained earnings (deficit)	130,000	6,000	(10,000)
Total	$735,500	$198,000	$91,000

The following additional information is relevant.

1. One week before the acquisitions, Punto Company had advanced $10,000 to Sara Company and $5,000 to Rob Company. Sara Company recorded an increase to Accounts Payable for its advance, but Rob Company had not recorded the transaction.
2. On the date of acquisition, Punto Company owed Sara Company $12,000 for purchases on account, and Rob Company owed Punto Company $3,000 and Sara Company $6,000 for such purchases. The goods purchased had all been sold to outside parties prior to acquisition.
3. Punto Company exchanged 13,400 shares of its common stock with a fair value of $12 per share for 95% of the outstanding common stock of Sara Company. In addition, stock issue fees of $4,000 were paid in cash. The acquisition was accounted for as a purchase.
4. Punto Company paid $50,000 cash for the 85% interest in Rob Company.
5. Three thousand dollars of Sara Company"s notes payable and $9,500 of Rob Company"s notes payable were payable to Punto Company.
6. Assume that for Sara, any difference between book value and the value implied by the purchase price relates to subsidiary land. However, for Rob, assume that any excess of book value over the value implied by the purchase price is due to overvalued buildings.

Required:

1. Give the book entries to record the two acquisitions in the accounts of Punto Company.
2. Prepare a consolidated balance sheet workpaper immediately after acquisition.
3. Prepare a consolidated balance sheet at the date of acquisition for Punto Company and its subsidiaries.