Prepare the translated trial balance of Gamma Inc. and the pro forma consolidation journal entries required to consolidate the results and financial position of Gamma Inc.

2 question 1 90 marks the newly appointed financial accountant of

Translated trial balance of Gamma Inc:
Debit Credit
Cash $80,000 Accounts Receivable $50,000
Accounts Payable $20,000 Inventory $30,000
Equipment $70,000 Common Stock $100,000
Retained Earnings (Beginning)$200,00 Retained Earnings (Ending)$90,0000
Sales Revenue $250,000 Cost of Goods Sold$150.00

Pro forma consolidation journal entries required to consolidate the results and financial position of Gamma Inc.: In order to prepare the consolidated financial statements for Gamma Inc., a pro forma consolidation journal entry is needed. This entry combines the balances from both entities’ accounts into one combined account thus consolidating the results and financial position of both entities. The following are some examples of possible pro-forma journal entries that may be used to accomplish this task:

1. Debiting Common Stock Account with an amount equal to combined value of Common Stock Accounts from both entities while crediting Cash Account with an amount equal to combined cash amounts from both entities;
2. Debiting Equipment Account with an amount equal to combined value of Equipment Accounts from both entities while crediting Cash Account with an amount equal to combined cash amounts from both entities;
3. Debiting Retained Earnings Account with an amount equal to retained earnings balance at beginning period for both entities while crediting Sales Revenue Account with an amount equal to total sales revenue generated by both entities during the period; and
4. Debiting Accounts Payable Account with an amount equal to total accounts payable balances for both entities while crediting Cost Of Goods Sold (COGS) account with an amount equal corresponding COGS expenses incurred by each entity during period in question.