Business, 25.06.2020 05:01 Rayzamartinez2757

River Corporation purchased 10 percent of the stock of K in June 1993 for $240,000, 65 percent of K in January 1996 for $1.4 million and 20 percent of the stock in March 1997 for $400,000. K Corporation showed the following information prior to being acquired by the Corporation: Income Dividends Declared Inventory Transfers to Patrick at Transfer Price
2014 $78,000 $25,000 $190,000
2015 85,000 27,000 210,000

K sells inventory to River Corporation after a markup based on a gross profit rate. At the end of 2014 and 2015, 30 percent of the current year purchases remain in River Corporation's inventory.

Required:
Create an Excel spreadsheet that computes the following:
1. Equity method balance in River Corporation's Investment in Shawn, Inc., account as of December 31, 2015.
2. Worksheet adjustments for the December 31, 2015, consolidation of River Corporation and K.
3. Formulate your solution so that Ks gross profit rate on sales to Patrick is treated as a variable.

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River Corporation purchased 10 percent of the stock of K in June 1993 for $240,000, 65 percent of K...

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