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

question 35

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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 using the cost 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 $15,000 was on hand on December 31, 2017.Sight's gross profit on intercompany sales is 40%.
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Required:
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Complete the Figure 8-2 worksheet for consolidated financial statements for 2017.
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$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. ? Sight's net income and dividends for two years were: ? ? \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. ? For both 2016 and 2017, Prism Company has accounted for its investment in Sight using the cost method. ? 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 $15,000 was on hand on December 31, 2017.Sight's gross profit on intercompany sales is 40%. ? Required: ? Complete the Figure 8-2 worksheet for consolidated financial statements for 2017. ? ? ?$ ?
$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. ? Sight's net income and dividends for two years were: ? ? \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. ? For both 2016 and 2017, Prism Company has accounted for its investment in Sight using the cost method. ? 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 $15,000 was on hand on December 31, 2017.Sight's gross profit on intercompany sales is 40%. ? Required: ? Complete the Figure 8-2 worksheet for consolidated financial statements for 2017. ? ? ?$

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Definitions:

Negative Figure

A value less than zero, often indicated in financial statements to represent losses, deficits, or outflows.

Comparative Balance Sheets

Financial statements that provide a side-by-side comparison of a company's financial position at different periods.

Horizontal Analysis

A financial analysis technique that compares historical financial data over a series of reporting periods to identify trends and growth patterns.

Trend Analysis

A method of financial analysis that allows one to predict future movements based on historical data.