Business, 09.03.2020 17:55 bateman

On January 1, 20X4, Plimsol Company acquired 100 percent of Shipping Corporation's voting shares, at underlying book value.

a. Plimsol uses the cost method in accounting for its investment in Shipping.
b. Shipping's retained earnings was $75,000 on the date of acquisition.
c. On December 31, 20X4, the data on the trial balances data for the two companies are as follows:

Plimsol Co: Shipping Corp:
Current Assets $100,000 Current Assets $75,000
Depreciable Assets $200,000 Depreciable Assets $150,000
Investment in Shipping Corp. $125,000
Other Expenses $60,000 Other Expenses $45,000
Depreciation Expense $20,000 Depreciation Expense $15,000
Dividends declared $25,000 Dividends declared $15,000
Current Liabilities $40,000 Current Liabilities $25,000
Long-term debt $75,000 Long-term debt $50,000
Common Stock $100,000 Common Stock $50,000
Retained earnings $150,000 Retained earnings $75,000
Sales $150,000 Sales $10,000.
Dividend Revenue $15,000.

Required:

Based on the information provided, what amount of retained earnings will be reported in the consolidated balance sheet prepared on December 31, 20X4?

a. $235,000
b. $210,000
c. $310,000
d. $225,000

Answers: 1

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On January 1, 20X4, Plimsol Company acquired 100 percent of Shipping Corporation's voting shares, at...

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