2) On January 1, 20X5, Peery Company acquired 100 percent of Standard Company's common shares at underlying book value. Peery uses the equity method in accounting for its ownership of Standard. On December 31, 20X5, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Standard Company Other Expenses Depreciation Expense Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Standard Company Peery Company Debit $ 238,000 300,000 100,000 90,000 30,000 32,000 Credit $ 120,000 50,000 120,000 100,000 175,000 200,000 25,000 Standard Company Debit Credit $ 95,000 170,000 70,000 17,000 10,000 $ 790,000 $ 790,000 $362,000 $ 85,000 30,000 50,000 50,000 35,000 112,000 $362,000 Required: 1. Prepare the consolidation entries needed as of December 31, 20X5, to complete a consolidation worksheet. 2. Prepare a three-part consolidation worksheet as of December 31, 20X5.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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2) On January 1, 20X5, Peery Company acquired 100 percent of Standard Company's
common shares at underlying book value. Peery uses the equity method in accounting for its
ownership of Standard. On December 31, 20X5, the trial balances of the two companies are as
follows:
Item
Current Assets
Depreciable Assets
Investment in Standard
Company
Other Expenses
Depreciation Expense
Dividends Declared
Accumulated Depreciation
Current Liabilities
Long-Term Debt
Common Stock
Retained Earnings
Sales
Income from Standard
Company
Peery Company
Debit
$ 238,000
300,000
100,000
90,000
30,000
32,000
Credit
$ 120,000
50,000
120,000
100,000
175,000
200,000
25,000
Standard Company
Debit
Credit
$ 95,000
170,000
70,000
17,000
10,000
$ 790,000 $ 790,000 $362,000
$ 85,000
30,000
50,000
50,000
35,000
112,000
$362,000
Required:
1. Prepare the consolidation entries needed as of December 31, 20X5, to complete a
consolidation worksheet.
2. Prepare a three-part consolidation worksheet as of December 31, 20X5.
Transcribed Image Text:2) On January 1, 20X5, Peery Company acquired 100 percent of Standard Company's common shares at underlying book value. Peery uses the equity method in accounting for its ownership of Standard. On December 31, 20X5, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Standard Company Other Expenses Depreciation Expense Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Standard Company Peery Company Debit $ 238,000 300,000 100,000 90,000 30,000 32,000 Credit $ 120,000 50,000 120,000 100,000 175,000 200,000 25,000 Standard Company Debit Credit $ 95,000 170,000 70,000 17,000 10,000 $ 790,000 $ 790,000 $362,000 $ 85,000 30,000 50,000 50,000 35,000 112,000 $362,000 Required: 1. Prepare the consolidation entries needed as of December 31, 20X5, to complete a consolidation worksheet. 2. Prepare a three-part consolidation worksheet as of December 31, 20X5.
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