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On December 31, 20X4, Puzzle Corporation acquired 90 percent of Sunday Incorporated's common stock for $864,000. At that date, the fair value of the noncontrolling interest was $96,000. Of the $240,000 differential, $5,000 related to the increased value of Sunday's inventory, $75,000 related to the increased value of its land, $60,000 related to the increased value of its equipment, and $50,000 was associated with a change in the value of its notes payable due to increasing interest rates. Sunday's equipment had remaining life of 15 years from the date of combination. Sunday sold all inventory it held at the end of 20X4 during 20X5; the land to which the differential related also was sold during the year for a large gain. The amortization of the differential relating to Sunday's notes payable was $7,500 for 20X5. At the date of combination, Puzzle reported retained earnings of $120,000, common stock outstanding of $500,000, and premium on common stock of $100,000. For the year 20X5, it reported net income of $150,000 but paid no dividends. Puzzle accounts for its investment in Sunday using the equity method. Required: a. Present all entries that Puzzle would have recorded during 20X5 with respect to its investment in Sunday. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. (Please correct my Part B)

On December 31, 20X4, Puzzle Corporation acquired 90 percent of Sunday Incorporated's common stock for $864,000. At that date, the fair value of the noncontrolling interest was $96,000. Of the $240,000 differential, $5,000 related to the increased value of Sunday's inventory, $75,000 related to the increased value of its land, $60,000 related to the increased value of its equipment, and $50,000 was associated with a change in the value of its notes payable due to increasing interest rates. Sunday's equipment had remaining life of 15 years from the date of combination. Sunday sold all inventory it held at the end of 20X4 during 20X5; the land to which the differential related also was sold during the year for a large gain. The amortization of the differential relating to Sunday's notes payable was $7,500 for 20X5. At the date of combination, Puzzle reported retained earnings of $120,000, common stock outstanding of $500,000, and premium on common stock of $100,000. For the year 20X5, it reported net income of $150,000 but paid no dividends. Puzzle accounts for its investment in Sunday using the equity method. Required: a. Present all entries that Puzzle would have recorded during 20X5 with respect to its investment in Sunday. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. (Please correct my Part B)

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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On December 31, 20X4, Puzzle Corporation acquired 90 percent of Sunday Incorporated's common stock for $864,000. At that date, the fair value of the noncontrolling interest was $96,000. Of the $240,000 differential, $5,000 related to the increased value of Sunday's inventory, $75,000 related to the increased value of its land, $60,000 related to the increased value of its equipment, and $50,000 was associated with a change in the value of its notes payable due to increasing interest rates. Sunday's equipment had a remaining life of 15 years from the date of combination. Sunday sold all inventory it held at the end of 20X4 during 20X5; the land to which the differential related also was sold during the year for a large gain. The amortization of the differential relating to Sunday's notes payable was $7,500 for 20X5. At the date of combination, Puzzle reported retained earnings of $120,000, common stock outstanding of $500,000, and premium on common stock of $100,000. For the year 20X5, it reported net income of $150,000 but paid no dividends. Puzzle accounts for its investment in Sunday using the equity method. Required: a. Present all entries that Puzzle would have recorded during 20X5 with respect to its investment in Sunday. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. (Please correct my Part B)
Transcribed Image Text:On December 31, 20X4, Puzzle Corporation acquired 90 percent of Sunday Incorporated's common stock for $864,000. At that date, the fair value of the noncontrolling interest was $96,000. Of the $240,000 differential, $5,000 related to the increased value of Sunday's inventory, $75,000 related to the increased value of its land, $60,000 related to the increased value of its equipment, and $50,000 was associated with a change in the value of its notes payable due to increasing interest rates. Sunday's equipment had a remaining life of 15 years from the date of combination. Sunday sold all inventory it held at the end of 20X4 during 20X5; the land to which the differential related also was sold during the year for a large gain. The amortization of the differential relating to Sunday's notes payable was $7,500 for 20X5. At the date of combination, Puzzle reported retained earnings of $120,000, common stock outstanding of $500,000, and premium on common stock of $100,000. For the year 20X5, it reported net income of $150,000 but paid no dividends. Puzzle accounts for its investment in Sunday using the equity method. Required: a. Present all entries that Puzzle would have recorded during 20X5 with respect to its investment in Sunday. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. (Please correct my Part B)
Required: a. Present all entries that Puzzle would have recorded during 20X5 with respect to its investment in Sunday. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No A B C No try my byully li A B Entry 1 2 3 Entry 1 2 Answer is complete and correct. General Journal 3 Investment in Sunday Incorporated Cash Investment in Sunday Incorporated Income from Sunday Incorporated Income from Sunday Incorporated Investment in Sunday Incorporated b. Present all consolidation entries that would have been included in the worksheet to prepare a full set of consolidated financial statements for the year 20X5. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Common stock Premium on common stock Answer is not complete. Accounts Retained earnings Income from Sunday Incorporated NCI in Net Income of Sunday Incorporated Investment in Sunday Incorporated NCI in Net Assets of Sunday Incorporated ** Ⓡ Debit 864,000 135,000 * * * 82,350 Debit 100,000 Ⓡ 135,000 Credit 15,000 864,000 135,000 82,350 Credit 500,000 120,000 783,000 87,000
Transcribed Image Text:Required: a. Present all entries that Puzzle would have recorded during 20X5 with respect to its investment in Sunday. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No A B C No try my byully li A B Entry 1 2 3 Entry 1 2 Answer is complete and correct. General Journal 3 Investment in Sunday Incorporated Cash Investment in Sunday Incorporated Income from Sunday Incorporated Income from Sunday Incorporated Investment in Sunday Incorporated b. Present all consolidation entries that would have been included in the worksheet to prepare a full set of consolidated financial statements for the year 20X5. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Common stock Premium on common stock Answer is not complete. Accounts Retained earnings Income from Sunday Incorporated NCI in Net Income of Sunday Incorporated Investment in Sunday Incorporated NCI in Net Assets of Sunday Incorporated ** Ⓡ Debit 864,000 135,000 * * * 82,350 Debit 100,000 Ⓡ 135,000 Credit 15,000 864,000 135,000 82,350 Credit 500,000 120,000 783,000 87,000
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