Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng

Exercise 4

80%, equity, effective interest bonds purchased this year, inventory profits. Refer to the preceding facts for Postman's acquisition of 80% of Spartan's common stock and the bond transactions. Postman uses the simple equity method to account for its investment in Spartan. On January 1, 2015, Postman held merchandise acquired from Spartan for $9,000. During 2015, Spartan sold $20,000 worth of merchandise to Postman. Postman held $12,000 of this merchandise at December 31, 2015. Postman owed Spartan $7,000 on December 31 as a result of these intercompany sales. Spartan has a gross profit rate of 25%.
Postman and Spartan had the following trial balances on December 31, 2015:
Prepare the worksheet necessary to produce the consolidated financial statements for Postman Company and its subsidiary Spartan Company for the year ended December 31, 2015. Include the determination and distribution of excess and income distribution schedules.