Ques 1 & 2

No. Account Titles Debit Credit

1 Common stock 45,000

Retained earnings 98,000
Income from sord company 77000
Dividends declared 21,000
Investment in Sword Company 199,000

2 Depreciation expense 3000

Income from sword company 3000

3 Buildings and equipment 33000

Goodwill 21000
Accumulated depreciaiton 3000
Investment in Sword company 51000

4 Accounts paybale 23000

Accounts receivable 23000

5 Accumulated depreciation 48,000

Buildings and equipment 48,000
Ques 3 Consolidation Worksheet
Sales 687,000 403,000 1,090,000
Less:COGS -494,000 -256,000 -750,000
Less:dep expense -22,000 -12,000 3000 -37,000
Less:other expense -58,000 -58,000 -116,000
Income from Sword Co. 74,000 77000 3000 0
Net income 187000 77000 80000 3000 187000
Statement of retained earnigns
Beginning balance 353,000 98,000 98,000 353,000
Net income 187000 77000 80000 3000 187000
Less:dividends declared -64,000 -21,000 21,000 -64,000
Ending balance 476000 154000 178000 24000 476000
Balance sheet
Assets
Cash 86,000 33,000 119,000
A/R 53,000 58,000 23000 88,000
Inventory 175,000 103,000 278,000
Land 84,000 28,000 112,000
Buildings & Equipment 494,000 150,000 33000 48,000 629,000
Less:Accumulated depreciation -137,000 -60,000 48,000 3000 -152,000
Investment in Sword Co. 250,000 250,000 0
Goodwill 21000 21,000
Total Assets 1005000 312000 102000 324000 1095000
Liabilities & equitty
Accounts payable 50,000 28,000 23000 55,000
Mortgages payable 195,000 85,000 280,000
Common stock 284,000 45,000 45,000 284,000
Retained earnings 476000 154000 178000 24000 476000
Total liabilities & equity 1005000 312000 246000 24000 1095000

Workings
Acquisition Price 197000
Add:Net income 77000
less:dividends -21,000
less:amort -3000
balance 250000
basic consolidation entry -199,000
Excess reclassification 51,000