Multiple Stock Purchases-Journal Entries L02Peck Company purchased Sanno Company common stock in a series of open-market cashpurchases from 2009 through 2011 as follows:EXERCISE 8-1DateShares AcquiredCostJanuary 1, 2009January 1, 2010January 1, 20111,8004,5009,900$ 46,00095,000262,350Sanno Company had 18,000 shares of $20 par value common stock outstanding during theentire period. Retained earnings balances for Sanno Company on relevant dates wereJanuary 1, 2009January 1, 2010January 1, 2011December 31, 2011$ 20,000(30,000)85,000170,000Dividends in the amount of $50,000 were distributed by Sanno Company only in 2011.Any difference between implied and book values is assigned to goodwill. Peck Company usesthe cost method to account for its investment in Sanno Company.Required:A. Prepare the journal entries that Peck Company would record on its books during 2011 toaccount for its investment in Sanno Company.B. Prepare the workpaper eliminating entries necessary to prepare a consolidated state-ments workpaper on December 31, 2011.

Working note: Computation of fair value of previously held investment in S company as on January 1,…

Multiple Stock Purchases-Journal Entries L02 Peck Company purchased Sanno Company common stock in a series of open-market cash purchases from 2009 through 2011 as follows: Date Shares Acquired Cost January 1, 2009 January 1, 2010 January 1, 2011 1,800 4,500 9,900 $ 46,000 95,000 262,350 Sanno Company had 18,000 shares of $20 par value common stock outstanding during the entire period. Retained earnings balances for Sanno Company on relevant dates were January 1, 2009 January 1, 2010 January 1, 2011 December 31, 201i $ 20,000 (30,000) 85,000 170,000 Dividends in the amount of $50,000 were distributed by Sanno Company only in 2011. Any difference between implied and book values is assigned to goodwill. Peck Company uses the cost method to account for its investment in Sanno Company. Required: A. Prepare the journal entries that Peck Company would record on its books during 2011 to account for its investment in Sanno Company. B. Prepare the workpaper eliminating entries necessary to prepare a consolidated state- ments workpaper on December 31, 2011.

Multiple Stock Purchases-Journal Entries L02 Peck Company purchased Sanno Company common stock in a series of open-market cash purchases from 2009 through 2011 as follows: Date Shares Acquired Cost January 1, 2009 January 1, 2010 January 1, 2011 1,800 4,500 9,900 $ 46,000 95,000 262,350 Sanno Company had 18,000 shares of $20 par value common stock outstanding during the entire period. Retained earnings balances for Sanno Company on relevant dates were January 1, 2009 January 1, 2010 January 1, 2011 December 31, 201i $ 20,000 (30,000) 85,000 170,000 Dividends in the amount of $50,000 were distributed by Sanno Company only in 2011. Any difference between implied and book values is assigned to goodwill. Peck Company uses the cost method to account for its investment in Sanno Company. Required: A. Prepare the journal entries that Peck Company would record on its books during 2011 to account for its investment in Sanno Company. B. Prepare the workpaper eliminating entries necessary to prepare a consolidated state- ments workpaper on December 31, 2011.

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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Subject : Accounting
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