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Question(s) / Instruction(s):

47.     The Notes Payable ledger account of Santos Company, the 95%-owned subsidiary of Probus Corporation, is shown below for the month of October, 2006, the first month after the business combination. Santos did not accrue interest on October 31, 2006.

Date

Explanation

Debit

Credit

Balance

2006

Oct. 7

25

 

60-day, 15% note payable to Probus

Corporation

90-day, 18% note payable to First

National Bank

 

 

60,000

90,000

 

60,000 cr

150,000 cr

     Prepare adjusting entries for Santos Company on October 31, 2006, the end of the fiscal year of both Probus Corporation and Santos Company.

48.     During the fiscal year ended December 31, 2006, Pride Corporation had the following loan transactions or events with its wholly owned subsidiary, Stride Company:

          Oct.      31      Loaned $50,000 to Stride on a 90-day, 9% promissory note
          Nov.      30      Discounted the Stride Oct. 31 promissory note at First National Bank at a
                    12% discount rate
          Dec.      1      Loaned $60,000 to Stride on a 120-day, 10% promissory note
                31      Prepared an appropriate adjusting entry

          Prepare journal entries for the foregoing loan transactions and events in the accounting records of (a) Pride Corporation and (b) Stride Company. Omit explanations for the journal entries. Round amounts to the nearest dollar.

Case

     49.     Included in the working paper eliminations (in journal entry format) for Parent Corp. and 93%-owned Subsidiary Company for the fiscal year ended May 31, 2006, were the following items related to Parent's sales to Subsidiary:
          
          Cost of Goods Sold?Subsidiary     $40,000 cr.
          Depreciation Expense?Subsidiary      $15,000 cr.
          
          Explain the effect of the foregoing on consolidated net income of Parent Corp. and Subsidiary and on minority interest in net income of subsidiary for the year ended May 31, 2006.

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