On January 1, 2016, Prism Company purchased 7,500 shares of the common stock of Sight Company for $495,000.On this date, Sight had 20,000 shares of $10 par common stock authorized, 10,000 shares issued and outstanding.Other paid-in capital and retained earnings were $200,000 and $300,000 respectively.On January 1, 2016, any excess of cost over book value is due to a patent, to be amortized over 15 years.
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Sight's net income and dividends for two years were:
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$$\begin{array} { l r r }
& 2016 & 2017 \
\text { Net income } & \$ 50,000 & \$ 80,000 \
\text { Dividends } & 10,000 & 20,000
\end{array}$$ In November 2016, Sight Company declared a 10% stock dividend at a time when the market price of its common stock was $50 per share.The stock dividend was distributed on December 31, 2016.
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For both 2016 and 2017, Prism Company has accounted for its investment in Sight using the cost method.
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During 2016, Sight Company sold goods to Prism Company for $40,000, of which $10,000 was on hand on December 31, 2016.During 2017, Sight sold goods to Prism for $60,000 of which $15,000 was on hand on December 31, 2017.Sight's gross profit on intercompany sales is 40%.
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Required:
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Complete the Figure 8-2 worksheet for consolidated financial statements for 2017.
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Question

On January 1, 2016, Prism Company purchased 7,500 shares of the common stock of Sight Company for $495,000.On this date, Sight had 20,000 shares of $10 par common stock authorized, 10,000 shares issued and outstanding.Other paid-in capital and retained earnings were $200,000 and $300,000 respectively.On January 1, 2016, any excess of cost over book value is due to a patent, to be amortized over 15 years.
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Sight's net income and dividends for two years were:
?
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 $$\begin{array} { l r r } 
& 2016 & 2017 \
\text { Net income } & \$ 50,000 & \$ 80,000 \
\text { Dividends } & 10,000 & 20,000
\end{array}$$ In November 2016, Sight Company declared a 10% stock dividend at a time when the market price of its common stock was $50 per share.The stock dividend was distributed on December 31, 2016.
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For both 2016 and 2017, Prism Company has accounted for its investment in Sight using the cost method.
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During 2016, Sight Company sold goods to Prism Company for $40,000, of which $10,000 was on hand on December 31, 2016.During 2017, Sight sold goods to Prism for $60,000 of which $15,000 was on hand on December 31, 2017.Sight's gross profit on intercompany sales is 40%.
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Required:
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Complete the Figure 8-2 worksheet for consolidated financial statements for 2017.
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Quizplus · Accepted Answer

The Answer of On January 1, 2016, Prism Company purchased 7,500 shares of the common stock of Sight Company for $495,000.On this date, Sight had 20,000 shares of $10 par common stock authorized, 10,000 shares issued and outstanding.Other paid-in capital and retained earnings were $200,000 and $300,000 respectively.On January 1, 2016, any excess of cost over book value is due to a patent, to be amortized over 15 years.
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Sight's net income and dividends for two years were:
?
?
 $$\begin{array} { l r r } 
& 2016 & 2017 \
\text { Net income } & \$ 50,000 & \$ 80,000 \
\text { Dividends } & 10,000 & 20,000
\end{array}$$ In November 2016, Sight Company declared a 10% stock dividend at a time when the market price of its common stock was $50 per share.The stock dividend was distributed on December 31, 2016.
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For both 2016 and 2017, Prism Company has accounted for its investment in Sight using the cost method.
?
During 2016, Sight Company sold goods to Prism Company for $40,000, of which $10,000 was on hand on December 31, 2016.During 2017, Sight sold goods to Prism for $60,000 of which $15,000 was on hand on December 31, 2017.Sight's gross profit on intercompany sales is 40%.
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Required:
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Complete the Figure 8-2 worksheet for consolidated financial statements for 2017.
?
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On January 1, 2016, Prism Company Purchased 7,500 Shares of the Common