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On January 1, 2018, Jamison Company purchased 70% of the common stock of Kelly Corporation for...

On January 1, 2018, Jamison Company purchased 70% of the common stock of Kelly Corporation for $455,000. The non-controlling interest was valued at $195,000. The stockholders’ equity of both companies is as follows:

Jamison Co. Kelly Co.
Common Stock 300,000 200,000
Retained Earnings 400,000 450,000

The income and dividend information for both companies for 2018 is listed below.

Jamison Co. Kelly Co.
Net Income 145,000 70,000
Dividends 50,000 40,000


Directions: Prepare any necessary consolidation entries for 2018.

Business   Accounting   
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Answer #1

Answer :

Conssolidation entries for 2018

To prepare consolidate financial statement of 2018

(i) Consolidate Investement :

Investment in Kelly Corporation = 6,50,000*70% = $455,000

NCI in net assets of Kelly corporation = 6,50,000*30% = $195,000

Stockholder's equity of Kelly corporation

= Common stock + Retained earnings

= 200,000 + 450,000 = $650,000

Date Particulars Debit ($) Credit ($)
Jan 01.2018 Common stock 200,000 -
Retained Earnings 450,000 -
Investment in Kelly Corp - 455,000
NCI In NA of Kelly Corp - 195,000

(ii). Consolidate dividend

Dividend income = $40,000*70% = $28,000

NCI of Kelly Corp = $40,000*30% = $12,000

Dividned consolidation entry :

Date Particulars Debit ($) Credit ($)
Jan 01.2018 Dividend income 28,000 -
NCI in NA of Kelly Corp 12,000 -
Dividend declared - 30,000

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