Candy Corporation Paid $240,000 on April 1,2013 for All of the Common

Question 28

Candy Corporation paid $240,000 on April 1,2013 for all of the common stock of Bun Corporation in a business acquisition.On January 1,2013,Bun's stockholders' equity was equal to $195,000.Bun's first quarter 2013 net income was $10,000 and first quarter 2013 dividends were $5,000.In 2013,preacquisition sales were $32,500 and preacquisition cost of sales was $22,500.(There were no other preacquisition expenses in 2013 . )Dividends are paid quarterly on March 31,June 30,September 30 and December 31.Any excess cost over book value acquired is allocated to goodwill. Additional information: 1.Candy sold equipment with a 5-year remaining useful life to Bun on July 1,2013 for a gain of $10,000.Salvage value of the equipment is zero and both companies use the straight-line depreciation method. 2.Bun's accounts payable balance at December 31 includes $5,000 due to Candy from the sale of equipment. 3.Candy accounts for its investment in Bun using the equity method. Required: Complete the working papers to consolidate the financial statements of Candy and Bun Corporations for the year ending December 31,2013. img img