Below you will find the trial balance for Parent Company and its whollyowned purchase, Subsidiary Company, as of December 31, 2012.The financial statements are denominated in British pounds.Other Important Information:
|
Company
|
Parent
|
Company
|
Subsidiary
|
Company
|
|
Accounts
|
Debit
|
Credit
|
Debit
|
Credit
|
|
Cash
|
£10,000
|
|
£4,000
|
|
|
Accounts Receivable
|
25,000
|
|
10,000
|
|
|
Inventory
|
30,000
|
|
12,000
|
|
|
Short-Term Investments
|
40,000
|
|
6,000
|
|
|
Prepaid Assets
|
35,000
|
|
12,000
|
|
|
Investment in Subsidiary
|
290,000
|
|
|
|
|
Long-Term Notes Receivable
|
150,000
|
|
14,000
|
|
|
Debt Service Fund
|
50,000
|
|
|
|
|
Depreciable Assets
|
900,000
|
|
350,000
|
|
|
Accumulated Depreciation
|
|
£200,000
|
|
£50,000
|
|
Intangible Assets
|
45,000
|
|
20,000
|
|
|
Current Liabilities
|
|
92,000
|
|
44,000
|
|
Long-Term Notes Payable
|
|
225,000
|
|
119,000
|
|
Common Stock
|
|
400,000
|
|
200,000
|
|
Retained Earnings
|
|
482,000
|
|
50,000
|
|
Sales Revenue
|
|
750,000
|
|
245,000
|
|
Cost of Goods Sold
|
330,000
|
|
160,000
|
|
|
Selling Expenses
|
100,000
|
|
45,000
|
|
|
Administrative Expenses
|
120,000
|
|
70,000
|
|
|
Interest Expenses
|
24,000
|
|
5,000
|
|
1. Subsidiary Company's assets and liabilities are all shown at fair value except for:
a. The fair value of Inventory is 32,000.
b. The fair value of Depreciable Assets is 370,000.
2. Subsidiary company sold Parent Company an item that is in Parent Company's inventory for 10,000 and cost Subsidiary Company 5,000.The sale was made to Parent Company on credit, and no payment has been made.
3. On December 27, 2012, Parent Company made a long-term loan to Subsidiary Company in the amount of 100,000.
4. Subsidiary Company paid Parent Company 7,000 for Consulting Services.Subsidiary Company considers this an Administrative Expense, and Parent Company considers it Sales Revenue.
5. Exchange rates are:
March 31, 2012, Exchange Rate: 1 £ = $1.24
Average Rate for 2012: 1 £ = $1.22
December 31, 2012, Exchange Rate: 1 £ = $1.20
Attachment:- ACC 690 MILESTONE 1 and 2.xls