Maurice Tutor
$15/per page/Negotiable
Following are the individual financial statements for Gibson and Davis for the year ending December 31, 2013:
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| Â | Â | Gibson | Â | Â | Davis | Â |
| Sales | $ | (600,000 | ) | $ | (300,000 | ) |
| Cost of goods sold | Â | 300,000 | Â | Â | 140,000 | Â |
| Operating expenses | Â | 174,000 | Â | Â | 60,000 | Â |
| Dividend income | Â | (24,000 | ) | Â | 0 | Â |
| Â | ||||||
| Net income | $ | (150,000 | ) | $ | (100,000 | ) |
| Â | ||||||
| Retained earnings, 1/1/13 | $ | (700,000 | ) | $ | (400,000 | ) |
| Net income | Â | (150,000 | ) | Â | (100,000 | ) |
| Dividends paid | Â | 80,000 | Â | Â | 40,000 | Â |
| Â | ||||||
| Retained earnings, 12/31/13 | $ | (770,000 | ) | $ | (460,000 | ) |
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| Cash and receivables | $ | 248,000 | Â | $ | 100,000 | Â |
| Inventory | Â | 500,000 | Â | Â | 190,000 | Â |
| Investment in Davis | Â | 528,000 | Â | Â | 0 | Â |
| Buildings (net) | Â | 524,000 | Â | Â | 600,000 | Â |
| Equipment (net) | Â | 400,000 | Â | Â | 400,000 | Â |
| Â | ||||||
| Total assets | $ | 2,200,000 | Â | $ | 1,290,000 | Â |
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| Liabilities | $ | (800,000 | ) | $ | (490,000 | ) |
| Common stock | Â | (630,000 | ) | Â | (340,000 | ) |
| Retained earnings, 12/31/13 | Â | (770,000 | ) | Â | (460,000 | ) |
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| Total liabilities and stockholders’ equity | $ | (2,200,000 | ) | $ | (1,290,000 | ) |
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Note: Parentheses indicate a credit balance.
Gibson acquired 60 percent of Davis on April 1, 2013, for $528,000. On that date, equipment owned by Davis (with a five-year remaining life) was overvalued by $30,000. Also on that date, the fair value of the 40 percent noncontrolling interest was $352,000. Davis earned income evenly during the year but paid the entire dividend on November 1, 2013.
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Prepare a consolidated income statement and calculate consolidated balances of:
| Goodwill | $ |
| Equipment | $ |
| Â | $ |
| Â | $ |
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