Exercise 9-6 (Static) Subsidiary with Preferred Stock Outstanding Lo Playtown Corporation purchased 75 percent of Sandbox Company common stock and 40 percent of its preferred stor 20X6, for $270,000 and $80,000, respectively. At the time of purchase, the fair value of Sandbox's common shares he noncontrolling interest was $90,000, Sandbox's balance sheet contained the following balances: Preferred Stock ($10 par value) Common Stock ($5 par value) Retained Earnings Total Stockholders' Equity $ 200,000 150,000 210,000 $ 560,000 For the year ended December 31, 20X6, Sandbox reported net income of $70,000 and paid dividends of $50,000 (whi preferred dividend). The preferred stock is cumulative and pays an annual dividend of 8 percent. Required: a. Prepare the journal entries recorded by Playtown for its investments in Sandbox during 20X6. b. Prepare the consolidation entries needed to prepare the consolidated financial statements for Playtown Corporation December 31, 20x6. Complete this question by entering your answers in the tabs below.
Exercise 9-6 (Static) Subsidiary with Preferred Stock Outstanding Lo Playtown Corporation purchased 75 percent of Sandbox Company common stock and 40 percent of its preferred stor 20X6, for $270,000 and $80,000, respectively. At the time of purchase, the fair value of Sandbox's common shares he noncontrolling interest was $90,000, Sandbox's balance sheet contained the following balances: Preferred Stock ($10 par value) Common Stock ($5 par value) Retained Earnings Total Stockholders' Equity $ 200,000 150,000 210,000 $ 560,000 For the year ended December 31, 20X6, Sandbox reported net income of $70,000 and paid dividends of $50,000 (whi preferred dividend). The preferred stock is cumulative and pays an annual dividend of 8 percent. Required: a. Prepare the journal entries recorded by Playtown for its investments in Sandbox during 20X6. b. Prepare the consolidation entries needed to prepare the consolidated financial statements for Playtown Corporation December 31, 20x6. Complete this question by entering your answers in the tabs below.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Exercise 9-6 (Static) Subsidiary with Preferred Stock Outstanding LO 9-2
Playtown Corporation purchased 75 percent of Sandbox Company common stock and 40 percent of its preferred stock on January 1,
20X6, for $270,000 and $80,000, respectively. At the time of purchase, the fair value of Sandbox's common shares held by the
noncontrolling interest was $90,000, Sandbox's balance sheet contained the following balances:
Preferred Stock ($10 par value)
Common Stock ($5 par value)
Retained Earnings
Total Stockholders' Equity
For the year ended December 31, 20X6, Sandbox reported net income of $70,000 and paid dividends of $50,000 (which includes the
preferred dividend). The preferred stock is cumulative and pays an annual dividend of 8 percent.
Required:
a. Prepare the journal entries recorded by Playtown for its investments in Sandbox during 20x6.
b. Prepare the consolidation entries needed to prepare the consolidated financial statements for Playtown Corporation as of
December 31, 20X6.
$ 200,000
150,000
210,000
$ 560,000
Complete this question by entering your answers in the tabs below.
Required A
Required B
Prepare the journal entries recorded by Playtown for its investments in Sandbox during 20x6.
Note: If no entry is required for a transaction/event, select "No journal entry required in the first account field.
view transaction list
A Record the purchase of Sandbox stock.
B Record the dividends from Sandbox.
c Record the dividends on the preferred stock from
Sandbox.
DRecord the equity-method income.
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