On January 1, 20X5, Peery Company acquired 100 percent of Standard Company's common shares at underlying book value. Peery uses the equity method in accounting for its ownership of Standard. On December 31, 20X5, the trial balances of the two companies are as follows: Item Peery Company Standard Company Debit Credit Debit Credit Current Assets $ 238,000 $ 95,000 Depreciable Assets 300,000 170,000 Investment in Standard Company 100,000 Other Expenses 90,000 70,000 Depreciation Expense 30,000 17,000 Dividends Declared 32,000 10,000 Accumulated Depreciation $ 120,000 $ 85,000 Current Liabilities 50,000 30,000 Long-Term Debt 120,000 50,000 Common Stock 100,000 50,000 Retained Earnings 175,000 35,000 Sales 200,000 112,000 Income from Standard Company 25,000 $ 790,000 $ 790,000 $ 362,000 $ 362,000 Required: Prepare the consolidation entries needed as of December 31, 20X5, to complete a consolidation worksheet. Prepare a three-part consolidation worksheet as of December 31, 20X5.
On January 1, 20X5, Peery Company acquired 100 percent of Standard Company's common shares at underlying book value. Peery uses the equity method in accounting for its ownership of Standard. On December 31, 20X5, the trial balances of the two companies are as follows: Item Peery Company Standard Company Debit Credit Debit Credit Current Assets $ 238,000 $ 95,000 Depreciable Assets 300,000 170,000 Investment in Standard Company 100,000 Other Expenses 90,000 70,000 Depreciation Expense 30,000 17,000 Dividends Declared 32,000 10,000 Accumulated Depreciation $ 120,000 $ 85,000 Current Liabilities 50,000 30,000 Long-Term Debt 120,000 50,000 Common Stock 100,000 50,000 Retained Earnings 175,000 35,000 Sales 200,000 112,000 Income from Standard Company 25,000 $ 790,000 $ 790,000 $ 362,000 $ 362,000 Required: Prepare the consolidation entries needed as of December 31, 20X5, to complete a consolidation worksheet. Prepare a three-part consolidation worksheet as of December 31, 20X5.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 20X5, Peery Company acquired 100 percent of Standard Company's common shares at underlying book value. Peery uses the equity method in accounting for its ownership of Standard. On December 31, 20X5, the
| Item | Peery Company | Standard Company | ||
|---|---|---|---|---|
| Debit | Credit | Debit | Credit | |
| Current Assets | $ 238,000 | $ 95,000 | ||
| 300,000 | 170,000 | |||
| Investment in Standard Company | 100,000 | |||
| Other Expenses | 90,000 | 70,000 | ||
| Depreciation Expense | 30,000 | 17,000 | ||
| Dividends Declared | 32,000 | 10,000 | ||
| $ 120,000 | $ 85,000 | |||
| Current Liabilities | 50,000 | 30,000 | ||
| Long-Term Debt | 120,000 | 50,000 | ||
| Common Stock | 100,000 | 50,000 | ||
| 175,000 | 35,000 | |||
| Sales | 200,000 | 112,000 | ||
| Income from Standard Company | 25,000 | |||
| $ 790,000 | $ 790,000 | $ 362,000 | $ 362,000 |
Required:
-
Prepare the consolidation entries needed as of December 31, 20X5, to complete a consolidation worksheet.
-
Prepare a three-part consolidation worksheet as of December 31, 20X5.
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