The December 31, 20X8, balance sheets for Pint Corporation and its 70 percent-owned subsidiary Saloon Company contained the following summarized amounts: PINT CORPORATION AND SALOON COMPANY
Balance Sheets
December 31, 20X8
Pint Corporation Saloon Company
Assets
Cash & Receivables $ 98,000 $ 40,000
Inventory 150,000 100,000
Buildings & Equipment (net) 310,000 280,000
Investment in Saloon Company 242,000
Total Assets $ 800,000 $ 420,000
Liabilities & Equity
Accounts Payable $ 70,000 $ 20,000
Common Stock 200,000 150,000
Retained Earnings 530,000 250,000
Total Liabilities & Equity $ 800,000 $ 420,000
Pint acquired the shares of Saloon Company on January 1, 20X7. On December 31, 20X8, assume Pint sold inventory to Saloon during 20X8 for $100,000 and Saloon sold inventory to Pint for $300,000. Pint’s balance sheet contains inventory items purchased from Saloon for $95,000. The items cost Saloon $55,000 to produce. In addition, Saloon’s inventory contains goods it purchased from Pint for $25,000 that Pint had produced for $15,000. Assume Saloon reported net income of $70,000 and dividends of $14,000.
Required:
a. Prepare all consolidation entries needed to complete a consolidated balance sheet worksheet as of December 31, 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)
Record the basic consolidation entry.
Record the entry to defer this year's unrealized profit on inventory transfers.