Unit 4 post problem 1

On December 31, 200X P Corporation paid $300,000 cash for 80% of the 
common stock of S Company which becomes a subsidiary. Following 
information is shown prior to the acquisition being recorded:

P Company 
Assets Liabilities and Equity
Cash 580,000 Liabilities 90,000 
Inventories 60,000 
Plant 340,000 Common Stock, $5pv 100,000 
Paid in Capital 200,000 
Retained Earnings 590,000 
Total 980,000 Total 980,000 

S Company
Assets Liabilities and Equity
Inventories 20,000 Liabilities 30,000 
Other assets 40,000 Long Term Debt 50,000 
Plant 140,000 Common Stock, $10pv 40,000 
Paid in Capital 20,000 
Retained Earnings 60,000 
Total 200,000 Total 200,000 
S market values are: 
Plant $250,000
Inventory $50,000
1. Prepare the entries in journal format to record the acquisition 
and post to the general edger accounts.
2. Prepare a consolidation workpaper.
3. Prepare consolidated balance sheet.