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Matthews Co. obtained all of the common stock of Jackson Co. on January 1, 2009. As of that date, Jackson had the following trial balance: Debit Credit Accounts payable Accounts receivable $ 60,000 $ 50,000 Additional paid -in capital 60,000 Buildings - net (20 -year life) Cash and short -term investments 140,000 70,000

Matthews Co. obtained all of the common stock of Jackson Co. on January 1, 2009. As of that date, Jackson had the following trial balance: Debit Credit Accounts payable Accounts receivable $ 60,000 $ 50,000 Additional paid -in capital 60,000 Buildings - net (20 -year life) Cash and short -term investments 140,000 70,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Matthews Co. obtained all of the common stock of Jackson Co. on January 1, 2009. As of that date, Jackson had the following trial balance: Debit Credit Accounts payable $ 60,000 Accounts receivable $ 50,000 Additional paid -in capital Buildings - net (20 -year life) Cash and short -term investments 60,000 140,000 70,000 Common stock 300,000 Equipment Inventory Land net (8-year life) 240,000 110,000 90,000 Long -term liabilities (mature 12/31/11) Retained earnings, 1/1/09 Supplies 180,000 120,000 20,000 Totals $ 720,000 $ 720,000 During 2009, Jackson reported net income of $96,000 while paying dividends of $12,000. During 2010, Jackson reported net income of $132,000 while paying dividends of $36,000. Assume that Matthews Co. acquired the common stock of Jackson Co. for $588,000 in cash. As of January 1, 2009, Jackson's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to an unamortized patent to be amortized over 10 years. Matthews decided to use the equity method for this investment. Required: (A.) Prepare consolidation worksheet entries for December 31, 2009. (B.) Prepare consolidation worksheet entries for December 31, 2010.
Transcribed Image Text:Matthews Co. obtained all of the common stock of Jackson Co. on January 1, 2009. As of that date, Jackson had the following trial balance: Debit Credit Accounts payable $ 60,000 Accounts receivable $ 50,000 Additional paid -in capital Buildings - net (20 -year life) Cash and short -term investments 60,000 140,000 70,000 Common stock 300,000 Equipment Inventory Land net (8-year life) 240,000 110,000 90,000 Long -term liabilities (mature 12/31/11) Retained earnings, 1/1/09 Supplies 180,000 120,000 20,000 Totals $ 720,000 $ 720,000 During 2009, Jackson reported net income of $96,000 while paying dividends of $12,000. During 2010, Jackson reported net income of $132,000 while paying dividends of $36,000. Assume that Matthews Co. acquired the common stock of Jackson Co. for $588,000 in cash. As of January 1, 2009, Jackson's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to an unamortized patent to be amortized over 10 years. Matthews decided to use the equity method for this investment. Required: (A.) Prepare consolidation worksheet entries for December 31, 2009. (B.) Prepare consolidation worksheet entries for December 31, 2010.
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