Prepare a consolidated balance sheet for Pal Corporation and Subsidiary at December 31, 2011.


Question Description:

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Prepare a consolidated balance sheet one year after acquisition Adjusted trial balances for Pal and Sor Corporations at December 31, 2011, are as follows (in thousands): Pal Sor Debits $ 480 $ 200 Current assets 1,000 600 Plant assets—net 840 — Investment in Sor 600 600 Cost of sales 200 100 Other expenses 100 — Dividends $3,220 $1,500 Credits $ 900 $ 420 Liabilities 600 100 Capital stock 680 180 Retained earnings 1,000 800 Sales 40 — Income from Sor $3,220 $1,500 Pal purchased all the stock of Sor for $800,000 cash on January 1, 2011, when Sor’s stockholders’ equity consisted of $100,000 capital stock and $180,000 retained earnings. Sor’s assets and liabilities were fairly valued except for inventory that was undervalued by $40,000 and sold in 2011, and plant assets that were undervalued by $80,000 and had a remaining useful life of four years from the date of the acquisition. REQUIRED: Prepare a consolidated balance sheet for Pal Corporation and Subsidiary at December 31, 2011.

Answer

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