Tim Ltd acquired all the issued capital of Tam Ltd on 1 July 2012 for $3,020,000. At that date the shareholdersâ equity of Tam Ltd was:
$
Share Capital
2,200,000
Retained Earnings
640,000
Additional information for the year ended 30 June 2014:
(1) Intercompany sales:
(a) Tim Ltd to Tam Ltd $42,000
(b) Tam Ltd to Tim Ltd $36,000
(2) Unrealised profits in closing inventory as at 30 June 2014 is $2,400 for goods sold by Tam Ltd to Tim Ltd and $4,800 for goods sold by Tim Ltd to Tam Ltd.
(3) Unrealised profit in opening inventory for goods sold by Tim Ltd to Tam Ltd as at 1 July 2013 is $2,800 and for goods sold by Tam Ltd to Tim Ltd is $4,200.
(4) Tim Ltd employees provide administration support to Tam Ltd. For these services, Tam Ltd pays an annual fee of $20,000 per annum.
(5) The final dividend of $33,000 declared as at 30 June 2013, was paid by Tam
Ltd in October 2013. An interim dividend was paid in January $28,000. A
final dividend was declared at 30 June, 2014 $40,000.
(6) On 30 June 2014, Tim Ltd purchased a motor vehicle from Tam Ltd for
$30,000. Tam Ltd made profit on this sale of $7,000.
(7) Tam Ltd raised funds from Tim Ltd by issuing $200,000, 8% Debentures on
1 July 2013. The annual interest charge was paid by Tam Ltd 30 June 2014.
(8) The directors review the balance of goodwill each year. They agree that:
(a) For the year ended 30 June 2013, goodwill was impaired by $10,000.
(b) For the year ended 30 June 2014, goodwill is to be impaired by
$40,000. Trial balance of Tim Ltd and Tam Ltd is attached for your information
Required:
Prepare the appropriate consolidated journal entries for 30 June 2014 to record the following transactions in the worksheet provided:
Trial Balance for Tim Ltd & Tam Ltd: 30 June 2014
Tim Ltd
Tam Ltd
Eliminations
Consolidation
Sales
2,970,000
1,650,000
Less: Cost of Sales
Inventory 01/07/2013
240,000
104,000
Purchases
1,250,000
626,000
1,490,000
730,000
Inventory 30/06/2014
230,000
98,000
Cost of Goods Sold
1,260,000
632,000
Gross Profit
1,710,000
1,018,000
Administration support fees
20,000
0
Gain on Sale of Plant
0
7,000
Dividends Received
61,000
0
Interest Received on Debentures
16,000
0
1,807,000
1,025,000
Less: Expenses - Selling Exp.
160,000
71,000
- Admin Exp.
- Financial Exp.
583,000
104,000
847,000
628,000
16,000
715,000
Operating Profit before Tax
960,000
310,000
Less: Tax expense
288,000
93,000
Profit after Tax
672,000
217,000
Retained Earnings 01/07/2013
1,176,000
843,000
Available for Appropriation
1,848,000
1,060,000
Appropriations
Interim dividend paid
160,000
28,000
Final dividend declared
280,000
40,000
Total Appropriations
440,000
68,000
Retained Earnings 30/06/2014
1,408,000
992,000
Share Capital
4,000,000
2,200,000
8% Debentures
0
200,000
Accounts Payable
144,000
72,000
Final Dividends Payable
280,000
40,000
Taxation Payable
188,000
50,000
6,020,000
3,554,000
Property, Plant & Equip (net)
1,464,000
1,800,000
Shares in Tam Ltd
3,020,000
0
8% Debentures
200,000
0
Other Non-Current Assets
650,000
1,300,000
Inventory
230,000
98,000
Other Current Assets
456,000
356,000
Goodwill on Consolidation
6,020,000
3,554,000
Please use the following format
General Journal
Consolidated worksheet for Tim Ltd & Tam Ltd as at 30 June 2014
Tim Ltd
Tam Ltd
Eliminations
Consolidation
Sales
2,970,000
1,650,000
Less: Cost of Sales
Inventory 01/07/2013
240,000
104,000
Purchases
1,250,000
626,000
1,490,000
730,000
Inventory 30/06/2014
230,000
98,000
Cost of Goods Sold
1,260,000
632,000
Gross Profit
1,710,000
1,018,000
Administration support fees
20,000
0
Gain on Sale of Plant
0
7,000
Dividends Received
61,000
0
Interest Received from Tam ltd
16,000
0
1,807,000
1,025,000
Less: Expenses - Selling Exp.
160,000
71,000
- Admin Exp.
583,000
628,000
- Financial Exp.
104,000
16,000
847,000
715,000
Operating Profit before Tax
960,000
310,000
Less: Tax expense
288,000
93,000
Profit after Tax
672,000
217,000
Retained Earnings 01/07/2013
1,176,000
843,000
Available for Appropriation
1,848,000
1,060,000
Appropriations
Interim Dividend paid
160,000
28,000
Final Dividend declared
280,000
40,000
Total Appropriations
440,000
68,000
Retained Earnings 30/06/2014
1,408,000
992,000
Share Capital
4,000,000
2,200,000
8% Debentures
0
200,000
Accounts Payable
144,000
72,000
Final Dividends Payable
280,000
40,000
Taxation Payable
188,000
50,000
6,020,000
3,554,000
Property, Plant & Equip (net)
1,464,000
1,800,000
Shares in Tam Ltd
3,020,000
0
8% Debentures in Tam
200,000
0
Other Non-Current Assets
650,000
1,300,000
Inventory
230,000
98,000
Other Current Assets
456,000
356,000
Goodwill on Consolidation
6,020,000
3,554,000
Tim Ltd acquired all the issued capital of Tam Ltd on 1 July 2012 for $3,020,000. At that date the shareholdersâ equity of Tam Ltd was:
$ | |
Share Capital | 2,200,000 |
Retained Earnings | 640,000 |
Additional information for the year ended 30 June 2014:
(1) Intercompany sales:
(a) Tim Ltd to Tam Ltd $42,000
(b) Tam Ltd to Tim Ltd $36,000
(2) Unrealised profits in closing inventory as at 30 June 2014 is $2,400 for goods sold by Tam Ltd to Tim Ltd and $4,800 for goods sold by Tim Ltd to Tam Ltd.
(3) Unrealised profit in opening inventory for goods sold by Tim Ltd to Tam Ltd as at 1 July 2013 is $2,800 and for goods sold by Tam Ltd to Tim Ltd is $4,200.
(4) Tim Ltd employees provide administration support to Tam Ltd. For these services, Tam Ltd pays an annual fee of $20,000 per annum.
(5) The final dividend of $33,000 declared as at 30 June 2013, was paid by Tam
Ltd in October 2013. An interim dividend was paid in January $28,000. A
final dividend was declared at 30 June, 2014 $40,000.
(6) On 30 June 2014, Tim Ltd purchased a motor vehicle from Tam Ltd for
$30,000. Tam Ltd made profit on this sale of $7,000.
(7) Tam Ltd raised funds from Tim Ltd by issuing $200,000, 8% Debentures on
1 July 2013. The annual interest charge was paid by Tam Ltd 30 June 2014.
(8) The directors review the balance of goodwill each year. They agree that:
(a) For the year ended 30 June 2013, goodwill was impaired by $10,000.
(b) For the year ended 30 June 2014, goodwill is to be impaired by
$40,000. Trial balance of Tim Ltd and Tam Ltd is attached for your information
Required:
Prepare the appropriate consolidated journal entries for 30 June 2014 to record the following transactions in the worksheet provided:
Trial Balance for Tim Ltd & Tam Ltd: 30 June 2014
Tim Ltd | Tam Ltd | Eliminations | Consolidation | ||
Sales | 2,970,000 | 1,650,000 | |||
Less: Cost of Sales | |||||
Inventory 01/07/2013 | 240,000 | 104,000 | |||
Purchases | 1,250,000 | 626,000 | |||
1,490,000 | 730,000 | ||||
Inventory 30/06/2014 | 230,000 | 98,000 | |||
Cost of Goods Sold | 1,260,000 | 632,000 | |||
Gross Profit | 1,710,000 | 1,018,000 | |||
Administration support fees | 20,000 | 0 | |||
Gain on Sale of Plant | 0 | 7,000 | |||
Dividends Received | 61,000 | 0 | |||
Interest Received on Debentures | 16,000 | 0 | |||
1,807,000 | 1,025,000 | ||||
Less: Expenses - Selling Exp. | 160,000 | 71,000 | |||
- Admin Exp. - Financial Exp. | 583,000 104,000 847,000 | 628,000 16,000 715,000 | |||
Operating Profit before Tax | 960,000 | 310,000 | |||
Less: Tax expense | 288,000 | 93,000 | |||
Profit after Tax | 672,000 | 217,000 | |||
Retained Earnings 01/07/2013 | 1,176,000 | 843,000 | |||
Available for Appropriation | 1,848,000 | 1,060,000 | |||
Appropriations | |||||
Interim dividend paid | 160,000 | 28,000 | |||
Final dividend declared | 280,000 | 40,000 | |||
Total Appropriations | 440,000 | 68,000 | |||
Retained Earnings 30/06/2014 | 1,408,000 | 992,000 | |||
Share Capital | 4,000,000 | 2,200,000 | |||
8% Debentures | 0 | 200,000 | |||
Accounts Payable | 144,000 | 72,000 | |||
Final Dividends Payable | 280,000 | 40,000 | |||
Taxation Payable | 188,000 | 50,000 | |||
6,020,000 | 3,554,000 | ||||
Property, Plant & Equip (net) | 1,464,000 | 1,800,000 | |||
Shares in Tam Ltd | 3,020,000 | 0 | |||
8% Debentures | 200,000 | 0 | |||
Other Non-Current Assets | 650,000 | 1,300,000 | |||
Inventory | 230,000 | 98,000 | |||
Other Current Assets | 456,000 | 356,000 | |||
Goodwill on Consolidation | |||||
6,020,000 | 3,554,000 |
Please use the following format
General Journal | |||
Consolidated worksheet for Tim Ltd & Tam Ltd as at 30 June 2014
Tim Ltd | Tam Ltd | Eliminations | Consolidation | ||
Sales | 2,970,000 | 1,650,000 | |||
Less: Cost of Sales | |||||
Inventory 01/07/2013 | 240,000 | 104,000 | |||
Purchases | 1,250,000 | 626,000 | |||
1,490,000 | 730,000 | ||||
Inventory 30/06/2014 | 230,000 | 98,000 | |||
Cost of Goods Sold | 1,260,000 | 632,000 | |||
Gross Profit | 1,710,000 | 1,018,000 | |||
Administration support fees | 20,000 | 0 | |||
Gain on Sale of Plant | 0 | 7,000 | |||
Dividends Received | 61,000 | 0 | |||
Interest Received from Tam ltd | 16,000 | 0 | |||
1,807,000 | 1,025,000 | ||||
Less: Expenses - Selling Exp. | 160,000 | 71,000 | |||
- Admin Exp. | 583,000 | 628,000 | |||
- Financial Exp. | 104,000 | 16,000 | |||
847,000 | 715,000 | ||||
Operating Profit before Tax | 960,000 | 310,000 | |||
Less: Tax expense | 288,000 | 93,000 | |||
Profit after Tax | 672,000 | 217,000 | |||
Retained Earnings 01/07/2013 | 1,176,000 | 843,000 | |||
Available for Appropriation | 1,848,000 | 1,060,000 | |||
Appropriations | |||||
Interim Dividend paid | 160,000 | 28,000 | |||
Final Dividend declared | 280,000 | 40,000 | |||
Total Appropriations | 440,000 | 68,000 | |||
Retained Earnings 30/06/2014 | 1,408,000 | 992,000 | |||
Share Capital | 4,000,000 | 2,200,000 | |||
8% Debentures | 0 | 200,000 | |||
Accounts Payable | 144,000 | 72,000 | |||
Final Dividends Payable | 280,000 | 40,000 | |||
Taxation Payable | 188,000 | 50,000 | |||
6,020,000 | 3,554,000 | ||||
Property, Plant & Equip (net) | 1,464,000 | 1,800,000 | |||
Shares in Tam Ltd | 3,020,000 | 0 | |||
8% Debentures in Tam | 200,000 | 0 | |||
Other Non-Current Assets | 650,000 | 1,300,000 | |||
Inventory | 230,000 | 98,000 | |||
Other Current Assets | 456,000 | 356,000 | |||
Goodwill on Consolidation | |||||
6,020,000 | 3,554,000 |