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Parent Co. purchases 100 percent of Son Company January 1,

Question : Parent Co. purchases 100 percent of Son Company January 1, : 3722

Parent Co. purchases 100 percent of Son Company on January 1, 20X1, when Parent's retained earnings balance is $520,000 and Son's is $150,000. During 20X1, Son reports $15,000 of net income and declares $6,000 of dividends. Parent reports $105,000 of separate operating earnings plus $15,000 of equity-method income from its 100 percent interest in Son; Parent declares dividends of $40,000.

4. Based on the preceding information, what is Parent's post-closing retained earnings balance on December 31, 20X1?

485,000

505,000

525,000

600,000

5. Based on the preceding information, what is Son's post-closing retained earnings balance on December 31, 20X1?

141,000

150,000

159,000

165,000

6. Based on the preceding information, what is the consolidated retained earnings balance on December 31, 20X1?

470,000

585,000

600,000

759,000

Solution
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