The December 31, 2011, post closing trial balance in thousandsfor libby corporations is preseted below
Debit Credit
Cash 22,500
investments 55,000
accouts recievable 30,000
Allownnce for uncollectible accounts 7,500
Prepaid insurance 4,500
Inventories 100,000
Land 45,000
Buildings 140,000
Accumulated Depreciation-buildings 50,000
Equipment 132,500
Accumulated Depreciation-equipment 30,000
Patents(unamortized balance) 5,000
Accounts Payable 37,500
Notes Payable, due 2012 65,000
Interest Payable 10,000
Bonds Payable due 2021 120,000
Common Stock 150,000
Retained Earnings 64,500
Total 534,500 534,500
Prepare a classified balance sheet for libby corporation atDecember 31,2011
The December 31, 2011, post closing trial balance in thousandsfor libby corporations is preseted below
Debit Credit
Cash 22,500
investments 55,000
accouts recievable 30,000
Allownnce for uncollectible accounts 7,500
Prepaid insurance 4,500
Inventories 100,000
Land 45,000
Buildings 140,000
Accumulated Depreciation-buildings 50,000
Equipment 132,500
Accumulated Depreciation-equipment 30,000
Patents(unamortized balance) 5,000
Accounts Payable 37,500
Notes Payable, due 2012 65,000
Interest Payable 10,000
Bonds Payable due 2021 120,000
Common Stock 150,000
Retained Earnings 64,500
Total 534,500 534,500
Prepare a classified balance sheet for libby corporation atDecember 31,2011
Related questions
The following is December 31, 2018, post-closing trial balance for Almway corporation.
| Account Title | Debits | Credits | ||
| Cash | 45,000 | Ā | Ā | Ā |
| Investments | 110,000 | Ā | Ā | Ā |
| Accounts receivable | 60,000 | Ā | Ā | Ā |
| Inventories | 200,000 | Ā | Ā | Ā |
| Prepaid insurance (for the next 9 months) | 9,000 | Ā | Ā | Ā |
| Land | 90,000 | Ā | Ā | Ā |
| Buildings | 420,000 | Ā | Ā | Ā |
| Accumulated depreciationābuildings | Ā | Ā | 100,000 | Ā |
| Equipment | 110,000 | Ā | Ā | Ā |
| Accumulated depreciationāequipment | Ā | Ā | 60,000 | Ā |
| Patents (net of amortization) | 10,000 | Ā | Ā | Ā |
| Accounts payable | Ā | Ā | 75,000 | Ā |
| Notes payable | Ā | Ā | 130,000 | Ā |
| Interest payable | Ā | Ā | 20,000 | Ā |
| Bonds Payable | Ā | Ā | 240,000 | Ā |
| Common stock | Ā | Ā | 300,000 | Ā |
| Retained earnings | Ā | Ā | 129,000 | Ā |
| Totals | 1,054,000 | Ā | 1,054,000 | Ā |
| Ā | ||||
Additional information:
1. The investment account includes an investment in the common stock of another corporation of $30,000 which management intends to hold for at least three years. The balance of these investments is intended to be sold in the coming year.
2. The land account includes land which costs $25,000 that the company has not used and is currently listed for sale.
3. The cash account includes $15,000 restricted in a fund to pay bonds payable that mature in 2021 and $23,000 restricted in a three-month Treasury bill.
4. The notes payable account consists of the following:
A) a $30,000 note due in six months.
B) a $50,000 note due in six years.
C) a $50,000 note due in five annual installments of $10,000 each, with the next installment due February 15, 2019.
5. The $60,000 balance in accounts receivable is net of an allowance for uncollectible accounts of $8,000.
6. The common stock account represents 100,000 shares of no par value common stock issued and outstanding. The corporation has 500,000 shares authorized.
Required
Prepare a classified balance sheet for the Almway Corporation at December 31, 2018.
Ā
Ā
The following is a December 31, 2018, post-closing trial balance for Almway Corporation.
| Account Title | Debits | Credits | ||
| Cash | 45,000 | |||
| Investments | 110,000 | |||
| Accounts receivable | 60,000 | |||
| Inventories | 200,000 | |||
| Prepaid insurance (for the next 9 months) | 9,000 | |||
| Land | 90,000 | |||
| Buildings | 420,000 | |||
| Accumulated depreciationĆ¢ĀĀbuildings | 100,000 | |||
| Equipment | 110,000 | |||
| Accumulated depreciationĆ¢ĀĀequipment | 60,000 | |||
| Patents (net of amortization) | 10,000 | |||
| Accounts payable | 75,000 | |||
| Notes payable | 130,000 | |||
| Interest payable | 20,000 | |||
| Bonds Payable | 240,000 | |||
| Common stock | 300,000 | |||
| Retained earnings | 129,000 | |||
| Totals | 1,054,000 | 1,054,000 | ||
Additional information:
The investment account includes an investment in common stock of another corporation of $30,000 which management intends to hold for at least three years. The balance of these investments is intended to be sold in the coming year.
The land account includes land which cost $25,000 that the company has not used and is currently listed for sale.
The cash account includes $15,000 restricted in a fund to pay bonds payable that mature in 2021 and $23,000 restricted in a three-month Treasury bill.
The notes payable account consists of the following:
A) a $30,000 note due in six months.
B) a $50,000 note due in six years.
C) a $50,000 note due in five annual installments of $10,000 each, with the next installment due February 15, 2019.
The $60,000 balance in accounts receivable is net of an allowance for uncollectible accounts of $8,000.
The common stock account represents 100,000 shares of no par value common stock issued and outstanding. The corporation has 500,000 shares authorized.
Required:
Prepare a classified balance sheet for the Almway Corporation at December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)
Topic 2: Consolidation: Intra-grouptransactions
On 1 July 2015, Ping Pong Ltd acquired all the issued shares ofSing Song Ltd. At the date of acquisition, the shareholdersĆ¢ĀĀ equityof Sing Song Ltd consisted of share capital $120,000; generalreserve $25,000 and retained earnings $55,000. The identifiable netassets of Sing Song Ltd were recorded at amounts equal to theirfair values, except for the following assets:
Carrying amount | Fair value | |
$ | $ | |
Land | 100,000 | 130,000 |
Inventories | 78,500 | 86,100 |
Machinery (cost $86,000) | 52,000 | 56,000 |
Vehicles (cost $58,000) | 47,000 | 53,000 |
The assets of Sing Song Ltd at acquisition date includedgoodwill recorded at $15,000 arising from a business combinationtransaction in 2011. As at the date of acquisition, the vehiclesand machinery were expected to have a further useful life of 6 and8 years respectively, with benefits to be received evenly overthose periods. Inventories on hand on 1 July 2015 was all sold by31 January 2016. The land owned at 1 July 2015 was sold inSeptember 2016 for $150,000. The machinery on hand at 1 July 2015was sold on 1 January 2018 for $38,000.
Adjustments for the differences between carrying amount and fairvalues of assets and liabilities on hand at acquisition date arerecognised on consolidation. When assets are sold or derecognised,any related valuation reserves are transferred to retainedearnings.
At 1 July 2015, Sing Song Ltd owned but had not recorded aninternally generated brand name, an identifiable asset included aspart of the business combination transaction. This brand name wasconsidered by Ping Pong Ltd to have a fair value of $29,000 and anindefinite useful life. An impairment test conducted with respectto the brand name on 30 June 2018 concluded that its recoverableamount at that date was $2,000 less than its carrying amount.
In June 2017, Sing Song Ltd paid a share dividend worth $20,000from the general reserve on hand at 1 July 2015.
The trial balances of both companies at 30 June 2018 showed thefollowing balances:
Ping Pong Ltd | Sing Song Ltd | |||
Dr ($) | Cr ($) | Dr ($) | Cr ($) | |
Sales revenue | 450,000 | 320,000 | ||
Dividend revenue | 17,000 | - | ||
Other income | 11,400 | 17,000 | ||
Proceeds on sale of equipment | 18,000 | - | ||
Proceeds on sale of machinery | - | 38,000 | ||
Cost of sales | 210,000 | 192,550 | ||
Income tax expense | 30,000 | 32,000 | ||
Depreciation and other expenses | 39,000 | 36,000 | ||
Carrying amount of equipment sold | 21,000 | - | ||
Carrying amount of machinery sold | - | 30,500 | ||
Dividend paid | 10,000 | 5,000 | ||
Dividend declared | 20,000 | 12,000 | ||
Transfer to general reserve | 10,000 | 5,000 | ||
Share capital | 200,000 | 140,000 | ||
General reserve | 35,000 | 10,000 | ||
Retained earnings (1 July 2017) | 51,300 | 67,500 | ||
Accounts payable | 69,500 | 36,000 | ||
Loan payable (due 30 June 2022) | 25,000 | 15,000 | ||
Dividend payable | 20,000 | 12,000 | ||
Provisions | 12,500 | 9,300 | ||
Current tax liability | 43,000 | 34,000 | ||
Deferred tax liability | 11,800 | 5,000 | ||
Accumulated depreciation-vehicles | 16,400 | 60,000 | ||
Accumulated depreciation-equipment | - | 34,500 | ||
8%Debentures (matures 30 June 2021) | 25,000 | - | ||
Cash | 2,500 | 1,250 | ||
Receivables | 27,000 | 13,000 | ||
Inventories | 39,700 | 24,500 | ||
Other current assets | 15,200 | 8,200 | ||
Deferred tax assets | 7,500 | 3,500 | ||
Vehicles | 88,000 | 158,000 | ||
Equipment | - | 42,000 | ||
Land | 140,000 | 180,000 | ||
Financial assets | 68,000 | 14,800 | ||
Goodwill | 28,000 | 15,000 | ||
Shares in Sing Song Ltd | 250,000 | - | ||
Debentures in Ping Pong Ltd | - | 25,000 | ||
1,005,900 | 1,005,900 | 798,300 | 798,300 | |
Additional information:
On 1 January 2018, Ping Pong Ltd sold an item of equipment toSing Song Ltd for $18,000. The equipment had a carrying amount atthe date of sale of $21,000. Both companies depreciate equipment at20% on a straight line basis.
On 1 May 2017, Sing Song Ltd sold a machine to Ping Pong Ltd for$7,800. The machine had a carrying amount of $7,000 at the date ofsale. Ping Pong Ltd recorded the machine as inventories. Theinventories item was sold to an external party in November 2017 for$8,200.
All interests on the 8% debentures has been paid and brought toaccount in the records of both companies.
During the 2017-2018 financial year, Ping Pong Ltd soldinventories to Sing Song Ltd for $75,000. The cost of theseinventories to Sing Song Ltd was $70,000. Of these inventories, 25%is still on hand at 30 June 2018.
The transfer to the general reserve recorded by Sing Song Ltd inthe current year was from retained earnings recorded at 1 July2015.
The tax rate is 30%.
Required:
Prepare an acquisition analysis.
Prepare the consolidation worksheet entries necessary to preparethe consolidated financial statements for the year ending 30 June2018 for the group comprising Ping Pong Ltd and Sing Song Ltd.
Note: you are not required to prepare the consolidationworksheet and the consolidated financial statements.
