Pit Corporation owns 90% of Stop Company's outstanding common stock.On 07/01/20, Pit sold inventory to Stop in exchange for $487,000 cash.Pit's cost of the inventory (purchased in 2020) was $365,250.On 12/19/20, Stop sold 30% of the inventory to 3rd parties at a cash price of $194,800.The other 70% of the inventory remains on hand at 12/31/20. A DEBIT TO 'SALES' IN THE AMOUNT OF:A CREDIT TO 'COST OF GOODS SOLD' IN THE AMOUNT OIA CREDIT TO 'INVENTORY' IN THE AMOUNT OF:

Journal entry: A journal entry is used to record day-to-day transactions of the business by debiting…

Answered: Pit Corporation owns 90% of Stop…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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e of cents Price Company purchased 90% of the outstanding common stock of Score Company on January 1, 2016, for $450,000. At that time, Score Company had stockholders' equity consisting of common stock, $200,000; other com $160,000; and retained earnings, $90,000. On December 31, 2020, trial balances for Price Company and Score Company were as follows: Price $ 109,000 $ Cash Accounts Receivable Note Receivable Inventory Investment in Score Company Plant and Equipment Land Score 78,000 94,000 -0- 166,000 75,000 309,000 158,000 450,000 -0- 940,000 420,000 160,000 70,000 70,000 50,000 822,000 242,000 250,500 124,000 Dividends Declared Cost of Goods Sold Operating Expenses Total Debits Accounts Payable Notes Payable Common Stock $3,351,500 $1,236,000 $ 132,000 $ 46,000 300,000 120,000 500,000 200,000 260,000 160,000 Other Contributed Capital Retained Earnings, 1/1 Sales Dividend and Interest Income Total Credits 687,000 1,420,000 52,500 $3.351,500 $1,236,000 210,000 500,000 -0- Price…
Lorn Corporation purchased inventory from Dresser Corporation for P120,000 on September 20, 20x2, and resold 80% of the purchased inventory to unaffiliated companies prior to December 31, 20x2, for P140,000. Dresser produced the inventory sold to Lorn for P75,000. Lorn owns 70% of Dresser’s voting common stock. The companies had no other transactions during 20x2.What amount of sales will be reported in the 20x2 consolidated income statement? A. P98,000 C. P140, 000B. P120, 000 D. P260, 000
Brandy Corporation owns 60 percent of Downer's voting shares. During 20X3, Brandy produced 50,000 computer desks at a cost of $82 each and sold 20,000 of them to Downer for $94 each. Downer sold 14,000 of the desks to unaffiliated companies for $130 each prior to December 31, 20X3, and sold the remainder in early 20X4 for $140 each. Both companies use perpetual inventory systems. Tax rate is 30 percent. Required What amounts of cost of goods sold did Brandy and Downer record in 20X3? What amount of cost of goods sold must be reported in the consolidated income statement for 20X3? Prepare the necessary journal entry to eliminate the intra-gorup sales and cost of goods sold.
Weisman Company, a 100% owned subsidiary of Martindale Corporation, sells inventory to Martindale at a 20% profit on selling price. The following data are available pertaining to inter-company purchases by Martindale: 4. 5. a. b. Weisman's profit numbers were $125,000, $142,000 and $265,000 for 2020, 2021, and 2022, respectively. Martindale received dividends from Weisman of $25,000 for 2020 and 2021, and $30,000 for 2022. C. d. 3. Assume Weisman uses the equity method to account for its investment in Martindale. What is the balance in the pre-consolidation Income (loss) from subsidiary account for 2021? $136,000 a. b. Inter-company sales $18,000 $19,400 $21,500 C. d. 2020: 2021: 2022: a. b. C. d. $140,800 $141,600 $142,800 Assume Weisman uses the equity method to account for its investment in Martindale. What is the balance in pre-consolidation Income (loss) from subsidiary for 2022? Unsold at year end (based on selling price) 2020: 2021: 2022: $235,000 $264,600 $265,400 $268,600…
In 20X6, Vines Inc. (Vines) purchased 40% of the common shares of Bottles Inc. (Bottles). At the time, there were no fair value differentials. In 20X7, Vines sold inventory to Bottles for $80,000. $25,000 of this remained at year end. This inventory was sold by Bottles in 20X8. Also during 20X8, Vines sold additional inventory to Bottles for $60,000 of which $30,000 remains in inventory. Vines earns a gross profit of 30% on sales of its inventory. Both companies pay income taxes at 25%. During 20X8, Bottles earned net income of $200,000. What is the amount of equity income reported by Vines in 20X8? A. $79,400 B. $79,550 C. $80,000 D. $80,450
Lorn Corporation purchased inventory from Dresser Corporation for P 120,000 on September 20, 20x2, and resold 80% of the purchased inventory to unaffiliated companies prior to December 31, 20x2, for P140,000. Dresser produced the inventory sold to Lorn for P75,000. Lorn owns 70% of Dresser’s voting common stock. The companies had no other transactionsduring 20x2. 1. What amount of sales will be reported in the 20x2 consolidated income statement? A. P98,000 C. P140, 000B. P120, 000 D. P260, 000 2. What amount of cost of goods sold will be reported in the 20x2 consolidated income statement? A. P60,000 C. P96, 000B. P75, 000 D. P120, 000 E. P171, 000 3. What amount of consolidated net income will be assigned to the controlling interest for 20x2? A. P20,000 D. P45, 000B. P30, 800 E. 69, 200C. P44, 000 F. 80, 000
Huey Company acquires 100% of the stock of Solar Corporation on January 1, 2019, for $2,400,000 cash. As of that date Solar had the following account balances: Book Value Fair value Cash $630,000 $630,000 Accounts receivable 775,000 775,000 Inventory 350,000 400,000 Building-net (10 year life) 1,000,000 900,000 Equipment-net (5 year life) 300,000 400,000 Land 600,000 900,000 Accounts Payable 125,000 125,000 Bonds Payable (Face amount $1,000,000, due 12/31/2023) 2,000,000 2,050,000 Common stock 500,000 Additional paid-in capital 250,000 Retained earnings 780,000 In 2019 and 2020, Solar had net income of $250,000 and $240,000, respectively. In addition, Solar paid dividends of $16,000 in both years. Inventory is assumed to be sold in 2019. Assume straight line amortization/ depreciation for assets and bonds payable. What amount of Solar's Bonds Payable would appear on the consolidated balance sheet at December 31, 2019? Select one: A. $2,050,000 B.$2,040,000 C. $2,000,000 D. $2,010,000

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