Advanced Accounting: Chapter 4 E4-3 General Questions

BA 459

Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 4

Exercise 4-3 (E4-3)
General Problems
1. Peggy Corporation owns a 70% interest in Sandy Corporation, acquired several years ago at book value. On December 31, 2006, Sandy mailed a check for $10,000 to Peggy in part payment of a $20,000 account with Peggy. Peggy had not received the check when its books were closed on December 31. Peggy Corporation had accounts receivable of $150,000 (including the $20,000 from Sandy), and Sandy had accounts receivable at $220,000 at year-end. In the consolidated balance sheet of Peggy Corporation and Subsidiary at December 31, 2006, accounts receivable will be shown in the amount of:


Use the following information in answering questions 2 and 3.
Primrose Corporation purchased a 70% interest in Starman Corporation on January 1, 2006, for $15,000, when Starman’s stockholders’ equity consisted of $3,000 common stock, $10,000 additional paid-in capital, and $2,000 retained earnings. Income and dividend information for Starman for 2006, 2007, and 2008 is as follows:
2006 2007 2008
Net income (or loss) $1,000 $200 $(500)
Dividends 400 100 —

2. Primrose reported separate income of $12,000 for 2008. Consolidated net income for 2008 is:

3. Primrose’s Investment in Starman balance at December 31, 2008, under the equity method is:

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Advanced Accounting: Chapter 4 E4-1 General Questions

BA 459

Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 4

Exercise 4-1 (E4-1)
General questions
1. Working paper entries normally:

2. Working paper techniques assume nominal accounts are:

3. Most errors made in consolidating financial statements will appear when:

4. Net income on consolidation working papers is:

5. On consolidation working papers, individual stockholders’ equity accounts of a subsidiary are:

6. On consolidation working papers, investment income from a subsidiary is:

7. On consolidation working papers, the investment in consolidated subsidiary account balances are:

8. On consolidation working papers, consolidated net income is determined by:

9. On consolidation working papers, consolidated end-of-the-period retained earnings is determined by:

10. Under the trial balance approach to consolidation working papers, which of the following is used?

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