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Assume Wells Corporation uses the simple equity method for its investments in subsidiaries. For 2015 and 2016, record each of the adjustments to the investment accounts. Provide all sup- porting calculations in good form.

Assume Wells Corporation uses the simple equity method for its investments in subsidiaries. For 2015 and 2016, record each of the adjustments to the investment accounts. Provide all sup- porting calculations in good form.

FINANCIAL ACCOUNTING
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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← → C ← M B < S Q Graded Homework Assignmen X Q Search the web... 2 W reader.yuzu.com/reader/books/9781305464803/ income distribution schedules. PROBLEMS Common stock ($5 par).. Common stock ($10 par). Yuzu: Advanced Accounting, 12e x + Problem 8-1 (LO 1) Stock dividend, subsidiary stock sales, equity method. On January 1, 2015, Wells Corporation acquires 8,000 shares of Towne Company stock and 18,000 shares of Sara Company stock for $176,000 and $240,000, respectively. Each invest- ment is acquired at a price equal to the subsidiary's book value, resulting in no excesses. Towne Company and Sara Company have the following stockholders' equities immediately prior to Wells's purchases: Type here to search Paid-in capital in excess of par Retained earnings Total stockholder's equity. 34 E 발 23.1 C exi/492 R Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. % 5 Y Towne Company $ 50,000 X 100,000 70,000 $220,000 & W Sara Company $300,000 [7] 100,000 $400,000 O hp 8 4 8 00 5 H 9
Transcribed Image Text:← → C ← M B < S Q Graded Homework Assignmen X Q Search the web... 2 W reader.yuzu.com/reader/books/9781305464803/ income distribution schedules. PROBLEMS Common stock ($5 par).. Common stock ($10 par). Yuzu: Advanced Accounting, 12e x + Problem 8-1 (LO 1) Stock dividend, subsidiary stock sales, equity method. On January 1, 2015, Wells Corporation acquires 8,000 shares of Towne Company stock and 18,000 shares of Sara Company stock for $176,000 and $240,000, respectively. Each invest- ment is acquired at a price equal to the subsidiary's book value, resulting in no excesses. Towne Company and Sara Company have the following stockholders' equities immediately prior to Wells's purchases: Type here to search Paid-in capital in excess of par Retained earnings Total stockholder's equity. 34 E 발 23.1 C exi/492 R Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. % 5 Y Towne Company $ 50,000 X 100,000 70,000 $220,000 & W Sara Company $300,000 [7] 100,000 $400,000 O hp 8 4 8 00 5 H 9
→ C Q Search the web... Graded Homework Assignmen X 470 reader.yuzu.com/reader/books/9781305464803/pageid/493 Required ► ► ► ► ► Type here to search Yuzu: Advanced Accounting, 12e X + 3 Additional information is as follows: a. Net income for Towne Company and Sara Company for 2015 and 2016 follows (income is assumed to be earned evenly throughout the year): Towne Company. Sara Company b. No cash dividends are paid or declared by Towne or Sara during 2015 and 2016. c. Towne Company distributes a 10% stock dividend on December 31, 2015. Towne stock is selling at $25 per share when the stock dividend is declared. d. On July 1, 2016, Towne Company sells 2,750 shares of stock at $35 per share. Wells Cor- poration purchases none of these shares. e. Sara Company sells 5,000 shares of stock on July 1, 2015, at $25 per share. Wells Corpora- tion purchases 3,700 of these shares. et Part 1 COMBINED CORPORATE ENTITIES AND CONSOLIDATIONS f. On January 1, 2016, Sara Company purchases 5,000 shares of its common stock from non- controlling interests at $20 per share. % Assume Wells Corporation uses the simple equity method for its investments in subsidiaries. For 2015 and 2016, record each of the adjustments to the investment accounts. Provide all porting calculations in good form. sup- Problem 8-2 (LO 1) Stock dividend. subsidiary stock sales. cost method. On Janu- 5 16 @ NO X 2015 $50,000 40,000 7 W 2016 $50,000 40,000 hp 7 8 9 f10 DS 44°F
Transcribed Image Text:→ C Q Search the web... Graded Homework Assignmen X 470 reader.yuzu.com/reader/books/9781305464803/pageid/493 Required ► ► ► ► ► Type here to search Yuzu: Advanced Accounting, 12e X + 3 Additional information is as follows: a. Net income for Towne Company and Sara Company for 2015 and 2016 follows (income is assumed to be earned evenly throughout the year): Towne Company. Sara Company b. No cash dividends are paid or declared by Towne or Sara during 2015 and 2016. c. Towne Company distributes a 10% stock dividend on December 31, 2015. Towne stock is selling at $25 per share when the stock dividend is declared. d. On July 1, 2016, Towne Company sells 2,750 shares of stock at $35 per share. Wells Cor- poration purchases none of these shares. e. Sara Company sells 5,000 shares of stock on July 1, 2015, at $25 per share. Wells Corpora- tion purchases 3,700 of these shares. et Part 1 COMBINED CORPORATE ENTITIES AND CONSOLIDATIONS f. On January 1, 2016, Sara Company purchases 5,000 shares of its common stock from non- controlling interests at $20 per share. % Assume Wells Corporation uses the simple equity method for its investments in subsidiaries. For 2015 and 2016, record each of the adjustments to the investment accounts. Provide all porting calculations in good form. sup- Problem 8-2 (LO 1) Stock dividend. subsidiary stock sales. cost method. On Janu- 5 16 @ NO X 2015 $50,000 40,000 7 W 2016 $50,000 40,000 hp 7 8 9 f10 DS 44°F
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