Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $114,800. At that date, the noncontrolling interest had a fair value of $49,200 and Soda reported $70,000 of common stock outstanding and retained earnings of $25,000. The differential is assigned to buildings and equipment, which had a fair value $22,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $47,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows: Pop Corporation Soda Company
Item Debit Credit Debit Credit
Cash & Accounts Receivable $ 17,400 $ 23,600
Inventory 167,000 37,000
Land 82,000 42,000
Buildings & Equipment 360,000 262,000
Investment in Soda Company 117,100
Cost of Goods Sold 188,000 81,800
Depreciation Expense 25,000 20,000
Interest Expense 18,000 7,200
Dividends Declared 32,000 17,000
Accumulated Depreciation $ 142,000 $ 90,000
Accounts Payable 94,400 37,000
Bonds Payable 234,180 90,000
Bond Premium 1,600
Common Stock 122,000 70,000
Retained Earnings 129,900 62,000
Sales 262,000 140,000
Other Income 11,600
Income from Soda Company 10,420
$ 1,006,500 $ 1,006,500 $ 490,600 $ 490,600
On December 31, 20X2, Soda purchased inventory for $30,000 and sold it to Pop for $50,000. Pop resold $29,000 of the inventory (i. e., $29,000 of the $50,000 acquired from Soda) during 20X3 and had the remaining balance in inventory at December 31, 20X3.
During 20X3, Soda sold inventory purchased for $54,000 to Pop for $90,000, and Pop resold all but $26,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $16,000 to Soda for $32,000. Soda sold all but $8,000 of the inventory prior to December 31, 20X3. Assume Pop uses the fully adjusted equity method, that both companies use straight-line depreciation, and that no property, plant, and equipment has been purchased since the acquisition.
Required:
Prepare all consolidation entries needed to prepare a full set of consolidated financial statements at December 31, 20X3, for Pop and Soda. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)