Urgent accounting questions
MarcusUKACC405FinalProjectOneStudentWorkbook1.xlsx
Instructions
Southern New Hampshire University | |
ACC 405: Advanced Accounting | |
MILESTONE ONE (Due in Module Four) | FINAL PROJECT ONE (Due in Module Six) |
Make corrections to Milestone One | |
1 | Prepare memo |
Calculate goodwill | |
Calculate investment balance | |
Calculate income assigned to the noncontrolling interest | |
Calculate noncontrolling interest | |
Calculate the gain or loss on retirement of bonds | |
2 | |
Create consolidation entries | |
3 | |
Prepare consolidation worksheet | |
Consolidating Entries
/xl/drawings/drawing1.xml#'Consolidation%20Entries'!A1Instructions Milestone One
/xl/drawings/drawing1.xml#'Instructions%20-%20Milestone%201'!A1Instructions Final Project
/xl/drawings/drawing1.xml#'Instructions%20-%20final'!A1Supporting Calculations
/xl/drawings/drawing1.xml#'Supporting%20Calculations'!A1Consolidation Worksheet
/xl/drawings/drawing1.xml#'Consolidation%20Worksheet'!A1Instructions - Milestone One
Southern New Hampshire University |
ACC 405 Advanced Accounting |
INSTRUCTIONS FOR MILESTONE ONE (Due in Module Four) |
IMPORTANT NOTE: |
Make sure to completely review the rubric for Milestone One |
You might want to print out the financial information |
Show your work |
Use the data from this milestone and begin working on your final project due in Module Six |
ITEMS TO COMPLETE FOR THIS MILESTONE: |
GENERAL |
You are the accountant for Posey Company. Prepare computations, consolidation entries, and consolidation entries for the preparation of consolidated financial statements for 20X7. Show your calculations. |
SUPPORTING COMPUTATIONS |
a. Compute the amount of the goodwill as of January 1, 20X7. |
b. Compute the balance of Posey’s Investment in Stargell Stock account as of January 1, 20X7. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) |
c. Compute the income that should be assigned to the noncontrolling interest in the 20X7 consolidated income statement. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) |
d. Compute the total noncontrolling interest as of December 31, 20X6. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) |
e. Compute the gain or loss on the constructive retirement of Stargell’s bonds that should appear in the 20X7 consolidated income statement. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) |
f. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) |
g. Prepare and complete a three-part worksheet for the preparation of consolidated financial statements for 20X7. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) |
FINANCIAL INFORMATION FOR THIS MILESTONE |
Refer to Trial Balance 2017 information (red tab) |
Posey Manufacturing Company acquired 90% of Stargell Corporation’s outstanding common stock on December 31, 20X5, for $1,116,900. At that date, the fair value of the noncontrolling interest was $124,100, and Stargell reported common stock outstanding of $487,000, premium on common stock of $267,000, and retained earnings of $407,000. The book values and fair values of Stargell’s assets and liabilities were equal except for land, which was worth $30,000 more than its book value. |
On April 1, 20X6, Posey issued at par $200,000 of 10% bonds directly to Stargell; interest on the bonds is payable March 31 and September 30. On January 2, 20X7, Posey purchased all of Stargell’s outstanding 10-year, 12% bonds from an unrelated institutional investor at 98. The bonds originally had been issued on January 2, 20X1, for 101. Interest on the bonds is payable December 31 and June 30. |
Since the date it was acquired by Posey Manufacturing, Stargell has sold inventory to Posey on a regular basis. The amount of such intercompany sales totaled $67,000 in 20X6 and $83,000 in 20X7, including a 30% gross profit. All inventory transferred in 20X6 had been resold by December 31, 20X6, except inventory for which Posey had paid $18,000 and did not resell until January 20X7. All inventory transferred in 20X7 had been resold at December 31, 20X7, except merchandise for which Posey had paid $16,667 |
As of December 31, 20X7, Stargell had declared but not yet paid its fourth-quarter dividend of $12,750. Both Posey and Stargell use straight-line depreciation and amortization, including the amortization of bond discount and premium. On December 31, 20X7, Posey’s management reviewed the amount attributed to goodwill as a result of its purchase of Stargell common stock and concluded that an impairment loss in the amount of $25,000 had occurred during 20X7 and should be shared proportionately between the controlling and noncontrolling interests. Posey uses the fully adjusted equity method to account for its investment in Stargell. |
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/xl/drawings/drawing2.xml#Instructions!A1Trial Balance 2017
On December 31, 20X7, trial balances for Posey and Stargell appeared as follows: | ||||
Posey Manufacturing | Stargell Corporation | |||
Item | Debit | Credit | Debit | |
Cash | $ 49,500 | $ 39,000 | ||
Current Receivables | 121,500 | 90,100 | ||
Inventory | 317,000 | 364,900 | ||
Investment in Stargell Stock | 1,243,800 | |||
Investment in Stargell Bonds | 985,000 | |||
Investment in Posey Bonds | 200,000 | |||
Land | 1,241,000 | 518,000 | ||
Buildings & Equipment | 2,940,000 | 1,915,000 | ||
Cost of Goods Sold | 1,829,000 | 426,000 | ||
Depreciation & Amortization | 184,000 | 65,000 | ||
Other Expenses | 632,000 | 206,000 | ||
Dividends Declared | 61,000 | 51,000 | ||
Accumulated Depreciation | $ 1,050,000 | $ 597,000 | ||
Current Payables | 699,190 | 213,000 | ||
Bonds Payable | 200,000 | 1,000,000 | ||
Premium on Bonds Payable | 3,000 | |||
Common Stock | 910,000 | 487,000 | ||
Premium on Common Stock | 610,000 | 267,000 | ||
Retained Earnings, January 1 | 2,848,950 | 457,000 | ||
Sales | 3,010,000 | 801,000 | ||
Other Income | 143,000 | 50,000 | ||
Income from Stargell Corp. | 132,660 | |||
Total | $ 9,603,800 | $ 9,603,800 | $ 3,875,000 | $ 3,875,000 |
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/xl/drawings/drawing3.xml#Instructions!A1Supporting Calculations
Required: |
a. Compute the amount of the goodwill as of January 1, 20X7. |
Goodwill at acquisition |
Goodwill as of January 1, 20X7: |
Goodwill at acquisition |
b. Compute the balance of Posey’s Investment in Stargell Stock account as of January 1, 20X7. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) |
Balance in investment |
Stargell stockholders' equity, January 1, 20X7: |
Balance in Investment in Stargell Stock account, |
January 1, 20X7 |
e. Compute the gain or loss on the constructive retirement of Stargell’s bonds that should appear in the 20X7 consolidated income statement. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) |
Gain |
Gain on constructive retirement of Stargell's bonds: |
Gain on constructive retirement of Stargell's bonds |
c. Compute the income that should be assigned to the noncontrolling interest in the 20X7 consolidated income statement. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) |
Income to noncontrolling interest |
Stargell's 20X7 net income * |
Income to noncontrolling interest |
Net income calculations * |
Net income |
d. Compute the total noncontrolling interest as of December 31, 20X6. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) |
Total noncontrolling interest |
Total noncontrolling interest, December 31, 20X6: |
Stargell's stockholders' equity, December 31, 20X6 |
Total noncontrolling interest, December 31, 20X6 |
Milestone 1 instructions
/xl/drawings/drawing4.xml#'Instructions%20-%20Milestone%201'!A1Consolidation Entries
A | |||
Record the basic consolidation entry. | Accounts | Debit | Credit |
A | |||
B | |||
Record the amortized excess value differential entry. | |||
C | |||
Record the excess value (differential) reclassification entry. | |||
D | |||
Record the reversal of last year's deferral. | |||
B | |||
E | |||
Record the deferral of the 20X7 unrealized profits on the inventory transfer. | |||
C | |||
F | |||
Record the elimination of the intercompany holdings of Posey's bonds. | |||
G | |||
Record the entry to eliminate the intercompany interest receivables/payables. | D | ||
H | |||
Record the entry to eliminate the accrued interest on the intercompany bonds. | |||
E | |||
I | |||
Record the entry to eliminate the intercompany holdings of Stargell's bonds. | |||
J | F | ||
Record the entry to eliminate the intercompany dividend payable/receivable. | |||
G | |||
H | |||
I | |||
J | |||
Milestone One instructions
/xl/drawings/drawing5.xml#'Instructions%20-%20Milestone%201'!A1Consolidation Worksheet
POSEY MANUFACTURING COMPANY AND SUBSIDIARY | ||||
Consolidated Financial Statement Worksheet | ||||
December 31, 20X7 | ||||
Consolidation Entries | ||||
Posey Co. | Stargell Corp. | DR | CR | Consolidated |
Income Statement | ||||
Sales | ||||
Other Income | ||||
Less: COGS | ||||
Less: Depr. & Amort. Expense | ||||
Less: Other Expenses | ||||
Goodwill Impairment Loss | ||||
Gain on Bond Retirement | ||||
Income from Stargell Corp. | ||||
Consolidated Net Income | ||||
NCI in Net Income | ||||
Controlling Interest in NI | ||||
Statement of Retained Earnings | ||||
Beginning Balance | ||||
Net Income | ||||
Less: Dividends Declared | ||||
Ending Balance | ||||
Balance Sheet | ||||
Assets | ||||
Cash | ||||
Current Receivables | ||||
Inventory | ||||
Land | ||||
Buildings & Equipment | ||||
Less: Accumulated Depreciation | ||||
Investment in Stargell Stock | ||||
Investment in Stargell Bonds | ||||
Investment in Posey Bonds | ||||
Goodwill | ||||
Total Assets | ||||
Liabilities & Equity | ||||
Current Payables | ||||
Bonds Payable | ||||
Premium on Bonds Payable | ||||
Common Stock | ||||
Premium on Common Stock | ||||
Retained Earnings | ||||
NCI in NA of Stargell Corp. | ||||
Total Liabilities & Equity | ||||
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MIlestone 1 instructions
/xl/drawings/drawing6.xml#'Instructions%20-%20Milestone%201'!A1Instructions - final
Southern New Hampshire University |
ACC 405: Advanced Accounting |
INSTRUCTIONS FOR FINAL |
IMPORTANT NOTE: |
Make sure to completely review the rubric for the final project. |
This page contains new information that must be included in the final project but has not been the milestone. |
ITEMS TO COMPLETE FOR THIS MILESTONE: |
GENERAL |
II. Final updated Excel Workbook and Memo |
h. Prepare a memo outlining the unique calculations required on the consolidation worksheet and on the statement of cash flows if Posey also obtains an international subsidiary with non-US$ functioning currency. [ACC-405-02] |
Milestones |
Final Submission: Consolidation Workbook and Memo |
In Module Six, you will submit your final project. It should be a complete, polished artifact containing all of the critical elements of the final product. It should reflect the incorporation of feedback gained throughout the course. In addition to revising your milestone work, make sure that you include the following elements from the prompt above, which were not included in the milestones: |
Prepare a memo outlining the unique calculations required on the consolidation worksheet and on the statement of cash flows if Posey also obtains an international subsidiary with non-US$ functioning currency. |
This submission will be graded with the Final Project One Rubric. |
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/xl/drawings/drawing7.xml#Instructions!A1