Company P Industries Purchased a 70% Interest in Company S

Essay

Company P Industries purchased a 70% interest in Company S on January 1, 20X1, and prepared the following determination and distribution of excess schedule:
Since the purchase, there have been the following intercompany transactions:
(1)On January 1, 20X2, Company P sold a piece of equipment with a net book value of $40,000 to Company S for $50,000. The equipment had a five-year remaining life.
(2)Each year, starting in 20X3, Company S has sold merchandise for resale to Company P at a gross profit of 20%. A summary of transactions shows the following:
(3)On January 1, 20X5, Company P purchased Company S's 8%, $100,000 face value bonds for $98,000, which were issued at par value. The bonds have five years to maturity.
Required:
Complete the following schedule to adjust the retained earnings of the noncontrolling and controlling interest on the December 31, 20X5, worksheet for a consolidated balance sheet only. Company P uses the simple equity method to account for its investment.