Pauley Corporation paid $24,800 for an 80% interest in Shore Corporation on January 1, 2010, at which time Shore's stockholders' equity consisted of $15,000 of Common Stock and $6,000 Retained Earnings. The fair values of Shore Corporation's assets and liabilities were identical to recorded book values when Pauley acquired its 80% interest.
Shore Corporation reported net income of $4,000 and paid dividends of $2,000 during 2010.
Pauley Corporation sold inventory items to Shore during 2010 and 2011 as follows:
2010 2011
Pauley's sales to Shore 5,000 6,000
Pauley's cost of sales to Shore 3,000 3,500
Unrealized profit at year-end 1,000 1,500
At December 31, 2011, the accounts payable of Shore included $1,500 owed to Pauley.
Required: complete the consolidation working papers for Pauley Corporation and Subsidiary for the year ended December 31, 2011. On a separate page, list the adjusting and elimination entries. (Format should follow P 5-6 and P 5-7)
Also, prepare a T-account for the Investment in Sub and the Noncontrolling Interest with the 12/31/2010 and 12/31/2011 balances.