MON SOUR CALAUNAN

PROBLEM 16-7
ADVANCE ACCOUNTING 2
Palo Corporation and Subsidiary
Consolidation Working Paper
December 31, 2011
Adjustments

& Eliminations

Debit

Credit

Palo
Corporation

Sebo
Company

300,000
19,000
319,000
210,000
25,000
23,000
258,000
61,000

150,000

230,000
61,000
291,000
20,000

50,000
20,000
70,000
10,000

271,000

60,000

272,000

Balance Sheet
Cash
Accounts receivable
Inventory
Buildings and equipment-net
Investment in Sebo stock

37,000
50,000
70,000
195,000
229,000

20,000
30,000
60,000
175,000

57,000
80,000
130,000
370,000
-

Goodwill
Total

581,000

285,000

20,000
657,000

40,000
70,000
200,000

20,000
55,000
150,000

(2)150,000

60,000
125,000
200,000

271,000
581,000

60,000
285,000

239,000

Income Statement
Sales
Investment Income
Total revenues
Cost of goods sold
Depreciation expense
Other expenses
Total cost and expenses
Net income carried forward
Retained Earnings
Retained earnings, Jan. 1
Net income from above
Total
Dividends declared
Retained earnings, Dec. 31
carried forward

Accounts payable
Taxes payable
Common stock
Retained earnings, Dec. 31
from above
Total

Consolidated
450,000
450,000
295,000
45,000
48,000
388,000
62,000

(1) 19,000
150,000
85,000
20,000
25,000
130,000
20,000

(2) 50,000

(1) 10,000

(1) 9,000
(2)200,000
(3) 20,000
(3) 20,000

239,000

230,000
62,000
292,000
20,000

272,000
657,000

b.

Consolidated Financial Statements

Palo Corporation and Subsidiary
Consolidated Income Statement
Year Ended December 31, 2011
Sales
Cost of goods sold
Gross profit
Expenses:
Depreciation expenses
Other expenses
Consolidated net income

P450,000
295,000
155,000
P45,000
48,000

93,000
P 62,000

Palo Corporation and Subsidiary

Consolidated Retained Earnings
Year Ended December 31, 2011
Retained earnings, January 1 Palo
Consolidated net income
Total
Dividends paid Palo
Retained earnings, December 31

P230,000
62,000
292,000
20,000
P272,000

Palo Corporation and Subsidiary

Consolidated Balance Sheet
December 31, 2011
Assets
Cash
Accounts receivable
Inventory
Buildings and equipment
Less: Accumulated depreciation
Goodwill
Total

P 57,000
80,000
130,000
P540,000
170,000

370,000
20,000
P657,000

Liabilities and Stockholders Equity

Accounts payable
P 60,000
Taxes payable
125,000
Common stock
200,000
Retained earnings, Dec. 31
272,000
Total
P657,000