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:ItemPeery CompanyStandard CompanyDebitCreditDebitCreditCurrent Assets$ 238,000 $ 95,000 Depreciable Assets300,000 170,000 Investment in Standard Company100,000 Other Expenses90,000 70,000 Depreciation Expense30,000 17,000 Dividends Declared32,000 10,000 Accumulated Depreciation $ 120,000 $ 85,000Current Liabilities 50,000 30,000Long-Term Debt 120,000 50,000Common Stock 100,000 50,000Retained Earnings 175,000 35,000Sales 200,000 112,000Income from Standard Company 25,000 $ 790,000$ 790,000$ 362,000$ 362,000Required: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.

A journal is the primary book of a business which is used to record all business transactions in terms of money in chronological order. It is also called books of orginal entry. After journal ledger is prepared . Data transfer from journal to ledger is called posting.Answer -1 Working note- Book value at beginning Add Net income Less dividends Book value at ending Total bool value 85000 25000 -10000 100000 Common stock + 50000 50000 Retained earning 35000 25000 -10000 50000 Journal entry- Particulars Debit Credit Common stock 50000 Retained earning 35000 Income from standard company 25000 Dividend declared 10000 Investment in standard company 100000Answer -2 Retained earning - Opening retained earning $175000 Add profit $58000 Add profit share from standard company $15000 Total retained earning $248000 Notes - Peery co. Standard co. Sale 200000 112000 Less other expenses -90000 -70000 Less depreciation -30000 -17000 Less dividend paid -32000 -10000 Total 48000 15000 Add dividend received 10000 Net income 58000 15000 Balance sheet- Equity & Liabilities Shareholder fund : Equity $100000 Retained earning (175000+58000+15000) 248000 Long term debt (120000+50000) 170000 Current liabilities 80000 Total (A) 598000 Assets: Fixed assets (180000+85000) 265000 Investment in standard co. 100000 Current asset (238000+95000-100000) 233000 Total (B) 598000

Answered: On January 1, 20X5, Peery Company…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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 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.

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