On January 1, 20x2, Penn Co (parent purchased 90% of the outstanding common shares of Senn Co. (Subsidiary. On January 2. 20x2. Senn Co purchased $20,000 face amount 8% of bond of Penn Co. from outside investors for $18.000 to yleld 10% (market rate) Theses bonds had been issued at per (tace amount $20000) by Penn Co. Senn Co intends to hoid the bonds until maturity Senn Co reported net income of $5.000 and Penn Company reported separate income $8,000 during 20x2. interests are paid annually Senn Co. uses effective interest method for interest income calculation Q1. Please complete the following consolidation entry at December 31, 20x2 Account Debit Credit Bnterest income Bonds payable Interest expense Investment in Penn Bond

On January 1, 20x2, Penn Co (parent purchased 90% of the outstanding common shares of Senn Co. (Subsidiary. On January 2. 20x2. Senn Co purchased $20,000 face amount 8% of bond of Penn Co. from outside investors for $18.000 to yleld 10% (market rate) Theses bonds had been issued at per (tace amount $20000) by Penn Co. Senn Co intends to hoid the bonds until maturity Senn Co reported net income of $5.000 and Penn Company reported separate income $8,000 during 20x2. interests are paid annually Senn Co. uses effective interest method for interest income calculation Q1. Please complete the following consolidation entry at December 31, 20x2 Account Debit Credit Bnterest income Bonds payable Interest expense Investment in Penn Bond

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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On 12/31/2020, a parent company purchased the bonds of its subsidiary from the bondholders of the subsidiary for $102,000 cash. The carrying value of the bonds on the general ledger of the subsidiary was $107,000. What amounts will appear on the parent's consolidated balance sheet for 2020? Investment Bonds A) In Bonds Payable $0 $0 Investment Bonds B) In Bonds Payable $102,000 $0 Investment Bonds In Bonds Payable $107,000 $102,000 Investment Bonds D) In Bonds Payable $102,000 $107,000 Investment Bonds E) In Bonds Payable $0 $107,000
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SUB is a 90% owned subsidiary of PAR. SUB issued $100,000 of 8%, 5-year bonds for $96,110 on 1/1/2015, when the market rate was 9%. Annual interest is paid on 12/31/. PAR purchased the bonds on 1/1/2018, for $103,667, when the market rate was 6%. Both companies use the effective interest method to amortize the premium/discount on the bonds. 1/ How much gain or loss on retirement should be reported in 2018 consolidated statements? a. 3,667 loss b. 3,667 gain c. 5,427 loss d. 1,760 loss 2/ The net adjustment needed to consolidated income in the consolidation process for 2018 is: (hint: complete the subsidiary income distribution schedule and calculate the surplus of a gain or loss on retirement and the interest adjustment) a. 2,714 decrease b. 5,427 decrease c. 2,622 increase d. 2,805 decrease
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Peace Company issued common shares with a par value of $59,000 and a market value of $159,300 in exchange for 30 percent ownership of Symbol Corporation on January 1, 20X2. Symbol reported the following balances on that date: Assets Cash Accounts Receivable Inventory (FIFO basis) Land Buildings & Equipment SYMBOL CORPORATION Balance Sheet January 1, 20X2 Book Value Fair Value $ 57,000 86,000 137,000 $ 57,000 86,000 167,000 59,000 74,000 505,000 328,000 (245,000) 33,000 Less: Accumulated Depreciation Patent Total Assets Liabilities & Equities Accounts Payable Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Equities $ 599,000 $ 745,000 $ 22,000 192,000 137,000 11,000 237,000 $ 599,000 $ 22,000 192,000 The estimated economic life of the patents held by Symbol is 4 years. The buildings and equipment are expected to last 6 more years on average. Symbol paid dividends of $15,000 during 20X2 and reported net income of $87,000 for the year. Required:…
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Armadillo Enterprises acquired the following equity investmentsat the beginning of year 1 as trading investments. Description Number of shares Market price per share Total price Finestra Company 15,000 x $25 $387,500 BVD Company 20,000 X$18 $360,000 Market values at theend of Years 1 &2 are presented below: Market/Fair Value End of year 1 End of year 2 Finestra Company $19 $23 BVD Company |$22 $28 REQUIREMENTS: Prepare the journal entry to record the acquisition of theinvestments. Prepare the adjusting journal entry required at the end of year1. Armadillo Enterprises sells 15,000 shares of BVD Company for $16at the beginning of year 2. Prepare the journal entry to record thesale. Prepare the adjusting journal entry required at the end of year2. Assume that ArmadilloEnterprises now holds these investments asavailable-for-sale. Prepare the journal entry to record the acquisition of theinvestments. Prepare the adjusting journal entry required at the end of year1. Armadillo Enterprises…
Peanut Company acquired 100 percent of Snoopy Company’s outstanding common stock for $300,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equal to $300,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, are as follows: Peanut Company Snoopy Company Debit Credit Debit Credit Cash $ 130,000 $ 80,000 Accounts Receivable 165,000 65,000 Inventory 200,000 75,000 Investment in Snoopy Company 355,000 0 Land 200,000 100,000 Buildings and Equipment 700,000 200,000 Cost of Goods Sold 200,000 125,000 Depreciation Expense 50,000 10,000 Selling and Administrative Expense 225,000 40,000 Dividends Declared 100,000 20,000 Accumulated Depreciation $ 450,000 $ 20,000 Accounts Payable 75,000 60,000 Bonds Payable 200,000 85,000 Common Stock 500,000 200,000 Retained Earnings 225,000 100,000 Sales 800,000…