Intercorporate Receivables and Payables

Kim Corporation acquired 100 percent of Normal Company’s outstanding shares on January 1, 20X7. Balance sheet data for the two companies immediately after the purchase follow:

Â	Kim	Normal
Â	Corporation	Company
Cash	$ 70,000	$ 35,000
Accounts Receivable	90,000	65,000
Inventory	84,000	80,000
Buildings & Equipment	400,000	300,000
Less: Accumulated Depreciation	(160,000)	(75,000)
Investment in Normal Company Stock	305,000	Â
Investment in Normal Company Bonds	50,000	Â
Total Assets	$839,000	$405,000
Accounts Payable	$ 50,000	$ 20,000
Bonds Payable	200,000	100,000
Common Stock	300,000	150,000
Capital in Excess of Par	Â	140,000
Retained Earnings	289,000	(5,000)
Total Liabilities & Equities	$839,000	$405,000

As indicated in the parent company balance sheet, Kim purchased $50,000 of Normal’s bonds from the subsidiary immediately after it acquired the stock. An analysis of intercompany receivables and payables also indicates that the subsidiary owes the parent $10,000. On the date of combination, the book values and fair values of Normal’s assets and liabilities were the same.

Required

a. Give all elimination entries needed to prepare a consolidated balance sheet for January 1, 20X7.

b. Complete a consolidated balance sheet worksheet.

c. Prepare a consolidated balance sheet in good form.