accounting-The following financial statements of William Ltd and its subsidiary Adam Ltd

QUESTION

signment, Company Accountinf, due 11/5/12Question Detail:The following financial statements of William Ltd and its subsidiary Adam Ltd have been extracted from their financial records at 30 June 2012.William LtdAdam Ltd$$$$Extract from Statements of Comprehensive Income and Changes in EquitySales Revenue1,114,524896,400Cost of Sales(770,240)(395,080)Gross Profit344,284501,320Other RevenueDividends received from Adam154,380-Management fee revenue43,990-Gain on sale of equipment66,40058,100ExpensesGeneral expenses(51,128)(64,242)Selling expenses(167,826)(119,520)Depreciation(48,970)(94,288)Management fee expense-(43,990)Total expenses(267,924)(322,040)Profit before tax341,130237,380Income tax expense(102,090)(70,052)Profit for the period239,040167,328Retained earnings 30 June 2011530,204397,072769,244564,400Dividends paid(228,084)(154,380)Retained earnings 30 June 2012541,160410,020Statements of Financial PositionCurrent assetsCash20,00030,000Accounts receivable78,60473,418Inventory152,72048,140Non-current assetsInvestment in Adam Ltd590,960-Land371,840541,160Equipment (cost)497,751590,628Accumulated depreciation(142,345)355,406(230,408)360,220Total Assets1,569,5301,052,938Current liabilitiesAccounts payable90,80276,858Short-term loan payable68,55841,500Non-current liabilitiesLong-term debt288,010192,560Shareholders’ equityShare capital581,000332,000Retained earnings541,160410,020Total Liabilities & Equity1,569,5301,052,938Other information:William Ltd acquired the 100 per cent interest in Adam Ltd on 1 July 2007, that is five (5) years earlier.At that time the capital and retained earnings of Adam Ltd were:Share capital $332,000 Retained earnings$298,800 $630,800At the date of acquisition all assets were valued at their fair value.During the year William Ltd made total sales to Adam Ltd of $99,600, and Adam Ltd sold $83,000 of inventory to William Ltd.The opening inventory in William Ltd as at 1 July 2011 included inventory acquired from Adam Ltd for $66,400 that had cost Adam Ltd $49,800.The closing inventory of William Ltd includes inventory acquired from Adam Ltd at a cost of $54,780.This inventory had cost Adam $46,480.The closing inventory of Adam Ltd includes inventory acquired from William Ltd at a cost of $19,920.This inventory had cost William Ltd $16,600.On 1 July 2011 Adam Ltd sold an item of equipment to William Ltd for $192,560 when its carrying value in Adam Ltd’s books was $134,460 (cost $224,100, accumulated depreciation $89,640).This equipment is assessed as having a remaining useful life of six (6) years.Adam Ltd paid $43,990 in management fees to William Ltd.The tax rate is 30 per cent.Prepare the journal entries necessary for the preparation of consolidated financial statements2. Prepare a consolidated statement of financial position as at 30 June 2012 and a consolidated statement of comprehensive income and a consolidated statement of changes in equity for the period ended 30 June 2012 for William Ltd and its subsidiaries.

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