ADVANCED FINANCIAL ACCOUNTING

PROBLEM 1:

-Sunday Co. buys all the common stocks of Friday Co. on January 1st 2012, by paying L.E. 200,000.-Friday Co. is not liquidated.

-The financial statements of Sunday and Friday just prior to acquisition were as follows:

BALANCE SHEETS

SUNDAY CO.FRIDAY CO.

ASSETSBVBVFV

Cash230,0002,0002,000

Inventories20,0003,0003,000

Equipment (Net)50,0004,0004,600

Patent10,000-----------400

Total Assets310,0009,000

LIABILITIES AND OWNERS' EQUITY

A/P212,0001,0001,000

C/S68,0004,6004,600

Excess over par6,0001,400

R/E24,0002,000

Total liabilities and O/E310,0009,000

Required:1. Prepare journal entries in the accounting books of Sunday Co. to record the acquisition of Friday Co.

2. Prepare the consolidated balance sheet at the date of acquisition.

PROBLEM 2:

Same problem as problem one but assume the following:Sunday Co. buys 70% of the voting stock (i.e. common stock) of Friday Co. on January 1st 2012, by paying L.E. 200,000.

Same requirements as problem one.ADVANCED FINANCIAL ACCOUNTING

SUMMER 2012

PRACTICE PROBLEMS: Consolidated Financial StatementsPROBLEM 1:

-Sunday Co. buys all the common stocks of Friday Co. on January 1st 2012, by issuing 5,000 shares with a par value of 8 L.E., and market value per share of 9.2 L.E.-Friday Co. is not liquidated.

-The financial statements of Sunday and Friday just prior to acquisition were as follows:

BALANCE SHEETS

SUNDAY CO.FRIDAY CO.

ASSETSBVBVFV

Cash230,0002,0002,000

Inventories20,0003,0003,000

Equipment (Net)50,0005,5004,600

Patent11,000-----------400

Total Assets311,00010,500

LIABILITIES AND OWNERS' EQUITY

A/P212,0001,0001,000

Bonds1,0001.5001,200

C/S68,0004,600

Excess over par6,0001,400

R/E24,0002,000

Total liabilities and O/E311,00010,500

Required:

Prepare the adjusting and eliminating journal entries in the accounting books of Sunday Co, in order to prepare the consolidated balance sheet.PROBLEM 2:

Same problem as problem one but assume the following:Sunday Co. buys 60% of the voting stock (i.e. common stock) of Friday Co. on January 1st 2012, by issuing 5,000 shares with a par value of 8 L.E., and market value per share of 9.2 L.E.Same requirements as problem one.