AccountingWashington Company purchased 100% ofJefferson Company on January 1, 20X1 for$1,000,000 when the book value of Jeffersonwas $750,000 with the excess caused byEquipment that was undervalued by $50,000and Goodwill. The Equipment had a four yearlife. In 20x2 Washington sold inventory toJefferson still in the inventory of Jefferson atyear end with a profit of $3,000.During 20X3,Washington sold to Jefferson inventory costing$30,000 for $40,000.At December 31, 20x3,Jefferson still had $6,000 cost to Jefferson ofthat inventory in its inventory.Jefferson reported$50,000 of income in 20X3 and paid dividendsof $10,000.B. For 20X3, prepare on the books ofWashington the full equity method journalentries.

Journal entry under equity method

Accounting Washington Company purchased 100% of Jefferson Company on January 1, 20X1 for $1,000,000 when the book value of Jefferson was $750,000 with the excess caused by Equipment that was undervalued by $50,000 and Goodwill. The Equipment had a four year life. In 20x2 Washington sold inventory to Jefferson still in the inventory of Jefferson at year end with a profit of $3,00O.During 20X3, Washington sold to Jefferson inventory costing $30,000 for $40,000.At December 31, 20x3, Jefferson still had $6,000 cost to Jefferson of that inventory in its inventory.Jefferson reporte $50,000 of income in 20X3 and paid dividends of $10,000. B. For 20X3, prepare on the books of Washinaton the full eauity method iournal

Accounting Washington Company purchased 100% of Jefferson Company on January 1, 20X1 for $1,000,000 when the book value of Jefferson was $750,000 with the excess caused by Equipment that was undervalued by $50,000 and Goodwill. The Equipment had a four year life. In 20x2 Washington sold inventory to Jefferson still in the inventory of Jefferson at year end with a profit of $3,00O.During 20X3, Washington sold to Jefferson inventory costing $30,000 for $40,000.At December 31, 20x3, Jefferson still had $6,000 cost to Jefferson of that inventory in its inventory.Jefferson reporte $50,000 of income in 20X3 and paid dividends of $10,000. B. For 20X3, prepare on the books of Washinaton the full eauity method iournal

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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