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On January 1, 2018, Jamison Company purchased 70% of the common stock of Kelly Corporation for $455,000
On January 1, 2018, Jamison Company purchased 70% of the common stock of Kelly Corporation for $455,000. The non-controlling interest was valued at $195,000. The stockholders’ equity of both companies is as follows:
| Jamison Co. | Kelly Co. | |
| Common Stock | 300,000 | 200,000 |
| Retained Earnings | 400,000 | 450,000 |
The income and dividend information for both companies for 2018 is listed below.
| Jamison Co. | Kelly Co. | |
| Net Income | 145,000 | 70,000 |
| Dividends | 50,000 | 40,000 |
Directions: Prepare any necessary consolidation entries for 2018.
Expert Solution
Conssolidation entries for 2018
To prepare consolidate financial statement of 2018
(i) Consolidate Investement :
Investment in Kelly Corporation = 6,50,000*70% = $455,000
NCI in net assets of Kelly corporation = 6,50,000*30% = $195,000
Stockholder's equity of Kelly corporation
= Common stock + Retained earnings
= 200,000 + 450,000 = $650,000
| Date | Particulars | Debit ($) | Credit ($) |
| Jan 01.2018 | Common stock | 200,000 | - |
| Retained Earnings | 450,000 | - | |
| Investment in Kelly Corp | - | 455,000 | |
| NCI In NA of Kelly Corp | - | 195,000 |
(ii). Consolidate dividend
Dividend income = $40,000*70% = $28,000
NCI of Kelly Corp = $40,000*30% = $12,000
Dividned consolidation entry :
| Date | Particulars | Debit ($) | Credit ($) |
| Jan 01.2018 | Dividend income | 28,000 | - |
| NCI in NA of Kelly Corp | 12,000 | - | |
| Dividend declared | - | 30,000 |
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