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

See similar textbooks

Similar questions

Meadows Company purchased a 80% interest in Szot Company five years ago with no AAP (i.e., purchased at book value). Each reports the following income statement for the current year: Income Statement Meadows Szot Sales $9,000,000 $750,000 Cost of goods sold -4,200,000 -260,000 Gross Profit 4,800,000 490,000 Income (loss) from subsidiary 112,000 Operating expenses -2,500,000 -350,000 Net income $2,412,000 $140,000 Required: a. Compute the income (loss) from subsidiary of $112,000 reported by the Meadows Company.b. Prepare the consolidated income statement for the current year.
Paneer owns 30% of Lassi and has done so for many years. During the year ended 31 December 20X1, Lassi made a net profit of £1.5m. Lassi sold inventory costing £1m to Paneer at a mark-up of 50%. 40% of the goods are still in Paneer's inventory at the year end. What is the "Income from associates" to be shown in the consolidated Statement of profit or loss for the year ended 31 December 20X1? a. £1,300,000 b. £450,000 C. £360,000 d. £390,000 O e. £150,000 O f. £300,000 g. £250,000
None
Crane Corporation acquired two inventory items at a lump-sum cost of $119000. The acquisition included 2970 units of product LF and 5940 units of product 18. LF normally sells for $30 per unit and 18 for $10 per unit. If Crane sells 990 units of LF, what amount of gross profit should it recognize? O $5900. O $1967. O $32630. O $29700.
Pit Coporation owns 75% of Stop Company's outstanding common stock. On 01/01/21, Pit sold sold a used piece of equipment to Stop in exchange for $236,000 cash. Pit's original cost of the equipment was $728,000 and accumulated depreciaiton of 01/01/21 was $447,000. The remaining useful life of the equipment is 10 years, and Stop will use that same usefull life. Both companies use the straight line method of depreciation. Pit's Journal Entries would include:
15. Northridge, Inc., buys 40% of Matador Company on January 1, 2019. for $550,000. The equity method of accounting is to be used, Matador's net assets on that date were $1.2 million. Any excess of cost over book value is attributable to a trade name with a 20-year remaining life. Matador immediately begins supplying inventory to Northridge as follows: Amount Held by Northridge Year Cost to Matador Transfer Price At Year End (at transfer price)2019 $70,000 $100,000 $25,0002020 $96,000 $150,000 $45,000Inventory held at the end of one year by Northridge is sold at the beginning of the next. Matador reports net income of $100,000 in 2019 and $150.000 in 2020 and declares (and pays)…
Manji
On January 1, 20x2, Gold Company purchased a computer with an expected economic life of five years. On January 1, 20x4, Gold sold the computer to TLK Corporation and recorded the following entry: Cash 39,000 Accumulated Depreciation 16,000 Computer Equipment 40,000 Gain on sale of equipment 15,000 TLK Corporation holds 60 percent of Gold’s voting shares. Gold reported net income of P45,000, and TLK reported income from its own operations of P85,000 for 20x4. There is no change in the estimated life of the equipment as a result of the inter-corporate transfer. In the preparation of the 20x4 consolidated balance sheet, the computer equipment will be: A. Debited for 1,000 C. Credited for 24,000B. Debited for 15,000 D. Debited for 40,000
i need the answer quickly