Lea Company acquired all of Tenzing Corporation's stock on January 1, 20X6 for $150,000 cash. On December 31, 20X8, the trial balances of the two companies were as follows:
Lea company Tenzing Corp. Debit Credit Debit Credit Cash $90,000 $58,000 Accounts Receivable 97,000 55,000 Land 80,000 45,000 Buildings and Equipment 300,000 200,000 Investment in Tenzing Corporation 180,000 Cost of Services Provided 140,000 75,000 Depreciation Expense 30,000 20,000 Other Expenses 70,000 35,000 Dividends Declared 40,000 20,000 Accumulated Depreciation $180,000 $100,000 Accounts Payable 42,000 18,000 Taxes Payable 20,000 20,000 Notes Payable 75,000 50,000 Common Stock 100,000 50,000 Retained Earnings 265,000 90,000 Service Revenue 300,000 180,000 Income from Subsidiary 45,000 $1,027,000 $1,027,000 $508,000 $508,000
Tenzing Corporation reported retained earnings of $75,000 at the date of acquisition. The difference between the acquisition price and underlying book value is assigned to buildings and equipment with a remaining economic life of five years from the date of acquisition. At December 31, 20X8, Tenzing owed Lea $4,000 for services provided.
4. Based on the preceding information, all of the following are consolidating entries required on December 31, 20X8, to prepare consolidated financial statements, except:
A) Common Stock 50,000 Retained Earnings 90,000 Income from Tenzing Corp. 50,000 Dividends declared 20,000 Investment in Tenzing Corp. 170,000 B) Accounts Payable 4,000 Accounts Receivable 4,000 C) Depreciation Expense 5,000 Income from Tenzing Corp. 5,000 D) Buildings and Equipment 20,000 Accumulated Depreciation 10,000 Investment in Tenzing Corp. 10,000
Option A
Option B
Option C
Option D
5. Based on the preceding information, what amount will be reported as total assets in the consolidated balance sheet for 20X8?
$666,000
$747,000
$651,000
$946,000
6. Based on the preceding information, what amount will be reported for total accounts payable in the consolidated balance sheet for the year 20X8?
$56,000
$46,000
$60,000
$42,000
Lea Company acquired all of Tenzing Corporation's stock on January 1, 20X6 for $150,000 cash. On December 31, 20X8, the trial balances of the two companies were as follows:
Lea company | Tenzing Corp. | |||
Debit | Credit | Debit | Credit | |
Cash | $90,000 | $58,000 | ||
Accounts Receivable | 97,000 | 55,000 | ||
Land | 80,000 | 45,000 | ||
Buildings and Equipment | 300,000 | 200,000 | ||
Investment in Tenzing Corporation | 180,000 | |||
Cost of Services Provided | 140,000 | 75,000 | ||
Depreciation Expense | 30,000 | 20,000 | ||
Other Expenses | 70,000 | 35,000 | ||
Dividends Declared | 40,000 | 20,000 | ||
Accumulated Depreciation | $180,000 | $100,000 | ||
Accounts Payable | 42,000 | 18,000 | ||
Taxes Payable | 20,000 | 20,000 | ||
Notes Payable | 75,000 | 50,000 | ||
Common Stock | 100,000 | 50,000 | ||
Retained Earnings | 265,000 | 90,000 | ||
Service Revenue | 300,000 | 180,000 | ||
Income from Subsidiary | 45,000 | |||
$1,027,000 | $1,027,000 | $508,000 | $508,000 |
Tenzing Corporation reported retained earnings of $75,000 at the date of acquisition. The difference between the acquisition price and underlying book value is assigned to buildings and equipment with a remaining economic life of five years from the date of acquisition. At December 31, 20X8, Tenzing owed Lea $4,000 for services provided.
4. Based on the preceding information, all of the following are consolidating entries required on December 31, 20X8, to prepare consolidated financial statements, except:
A) | Common Stock | 50,000 | |
Retained Earnings | 90,000 | ||
Income from Tenzing Corp. | 50,000 | ||
Dividends declared | 20,000 | ||
Investment in Tenzing Corp. | 170,000 | ||
B) | Accounts Payable | 4,000 | |
Accounts Receivable | 4,000 | ||
C) | Depreciation Expense | 5,000 | |
Income from Tenzing Corp. | 5,000 | ||
D) | Buildings and Equipment | 20,000 | |
Accumulated Depreciation | 10,000 | ||
Investment in Tenzing Corp. | 10,000 |
Option A
Option B
Option C
Option D
5. Based on the preceding information, what amount will be reported as total assets in the consolidated balance sheet for 20X8?
$666,000
$747,000
$651,000
$946,000
6. Based on the preceding information, what amount will be reported for total accounts payable in the consolidated balance sheet for the year 20X8?
$56,000
$46,000
$60,000
$42,000