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1 Palm Corporation and SubsidiaryConsolidation Working Papers

for the year ended December 31, 2009

Palm70%Sail

Adjustments andEliminations

ConsolidatedStatements

Income Statement 

Sales $ 310,000 $ 100,000 $ 410,000

Income from Sail 10,500 a 10,500

Cost of goods sold 200,000 65,000 265,000

Operating expenses 77,000 20,000 97,000

Consolidated NI $ 48,000

Noncontrol. share

($15,000 × 30%) c 4,500 4,500

Net income – Control.

share $ 43,500 $ 15,000 $ 43,500Retained Earnings

Retained earnings

— Palm $ 65,000 $ 65,000

Retained earnings

— Sail $ 11,000 b 11,000

Net income 43,500 15,000 43,500

Dividends 30,000 10,000 a 7,000

c 3,000 30,000

Retained earnings

December 31 $ 78,500 $ 16,000 $ 78,500Balance Sheet 

Cash $ 45,500 $ 15,000 $ 60,500

Acc. Receiv. — net 60,000 30,000 90,000

Inventories 24,000 20,000 44,000

PP&E — net 120,000 35,000 155,000

Investment in Sail 49,000 a 3,500

b 45,500$ 298,500 $ 100,000 $ 349,500

Accounts payable $ 30,000 $ 18,000 $ 48,000

Other liabilities 20,000 12,000 32,000

Capital stock 150,000 50,000 b 50,000 150,000

Other paid-in

capital 20,000 4,000 b 4,000 20,000

Retained earnings 78,500 16,000 78,500$ 298,500 $ 100,000

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Noncontrolling interest January 1 b 19,500

Noncontrolling interest December 31 c 1,500 21,000

$ 349,500

2 Palm Corporation and SubsidiaryConsolidated Income Statement

for the year ended December 31, 2009Sales $410,000Less: Cost of goods sold 265,000

Gross profit 145,000Operating expenses 97,000

Total consolidated income 48,000Less: Noncontrolling interest share 4,500

Controlling share of consolidated net income $ 43,500

Palm Corporation and SubsidiaryConsolidated Retained Earnings Statement

for the year ended December 31, 2009Consolidated retained earnings January 1 $ 65,000Add: Controlling share of onsolidated net income 43,500Less: Dividends of Palm (30,000 )

Consolidated retained earnings December 31 $ 78,500

Palm Corporation and SubsidiaryConsolidated Balance Sheet

at December 31, 2009

 AssetsCurrent assets:

Cash $ 60,500Receivables — net 90,000Inventories 44,000 $194,500

Plant assets — net 155,000Total assets $349,500

Liabilities and Stockholders’ Equity Liabilities:

Accounts payable $ 48,000

Other liabilities 32,000 $ 80,000

Stockholders’ equity:Capital stock, $10 par $150,000Other paid-in capital 20,000Consolidated retained earnings 78,500

248,500Add: Noncontrolling interest 21,000 269,500

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Total liabilities and stockholders’ equity $349,500

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