On January 1, 2016, Prism Company Purchased 7,500 Shares of the Common

question 2

Essay

On January 1, 2016, Prism Company purchased 7,500 shares of the common stock of Sight Company for $495,000.On this date, Sight had 20,000 shares of $10 par common stock authorized, 10,000 shares issued and outstanding.Other paid-in capital and retained earnings were $200,000 and $300,000 respectively.On January 1, 2016, any excess of cost over book value is due to a patent, to be amortized over 15 years.
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Sight's net income and dividends for two years were:
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$$\begin{array} { l r r } & 2016 & 2017 \\\text { Net income } & \$ 50,000 & \$ 80,000 \\\text { Dividends } & 10,000 & 20,000\end{array}$$ In November 2016, Sight Company declared a 10% stock dividend at a time when the market price of its common stock was $50 per share.The stock dividend was distributed on December 31, 2016.
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For both 2016 and 2017, Prism Company has accounted for its investment in Sight Company using the simple equity method.
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During 2016, Sight Company sold goods to Prism Company for $40,000, of which $10,000 was on hand on December 31, 2016.During 2017, Sight sold goods to Prism for $60,000 of which $15,000 was on hand on December 31, 2017.Sight's gross profit on intercompany sales is 40%.
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Required:
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Complete the Figure 8-1 worksheet for consolidated financial statements for 2017.
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Definitions:

Interest Payable

The amount of interest expense that has been incurred but not yet paid by a company during a given period.

Current Liabilities

Short-term financial obligations that are due to be paid within one year, including accounts payable, short-term loans, and taxes payable.

Long-term Debt

Loans or other forms of credit that are due for repayment in more than one year's time.

Long-term Debt

Borrowings of a company that are due for repayment more than one year into the future.