Peanut Company acquired 100 percent of Snoopy Company's outstanding common stock for $310,000 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $310,000. 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 Debit Credit Cash $ 133,000 Snoopy Company Debit $ 82,000 Credit Accounts Receivable 171,000 Inventory 211,000 71,000 79,000 Investment in Snoopy Company 325,000 0 Land 207,000 96,000 Buildings and Equipment 711,000 185,000 Cost of Goods Sold 218,000 144,000 Depreciation Expense 50,000 17,000 Selling and Administrative Expense 227,000 48,000 Dividends Declared 115,000 38,000 Accumulated Depreciation $ 434,000 $ 34,000 Accounts Payable 73,000 58,000 Bonds Payable 189,000 96,000 Common Stock 488,000 217,000 Retained Earnings 340,000 93,000 Sales 791,000 Income from Snoopy Company 53,000 262,000 0 Total $ 2,368,000 $ 2,368,000 $ 760,000 $ 760,000 (Assume the company prepares the optional Accumulated Depreciation Elimination Entry) Required: a. Prepare the journal entries on Peanut's books for the acquisition of Snoopy on January 1, 20X8, as well as any normal equity method entry(ies) related to the investment in Snoopy Company during 20X8. b. Prepare a consolidation worksheet for 20X8.
Peanut Company acquired 100 percent of Snoopy Company's outstanding common stock for $310,000 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $310,000. 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 Debit Credit Cash $ 133,000 Snoopy Company Debit $ 82,000 Credit Accounts Receivable 171,000 Inventory 211,000 71,000 79,000 Investment in Snoopy Company 325,000 0 Land 207,000 96,000 Buildings and Equipment 711,000 185,000 Cost of Goods Sold 218,000 144,000 Depreciation Expense 50,000 17,000 Selling and Administrative Expense 227,000 48,000 Dividends Declared 115,000 38,000 Accumulated Depreciation $ 434,000 $ 34,000 Accounts Payable 73,000 58,000 Bonds Payable 189,000 96,000 Common Stock 488,000 217,000 Retained Earnings 340,000 93,000 Sales 791,000 Income from Snoopy Company 53,000 262,000 0 Total $ 2,368,000 $ 2,368,000 $ 760,000 $ 760,000 (Assume the company prepares the optional Accumulated Depreciation Elimination Entry) Required: a. Prepare the journal entries on Peanut's books for the acquisition of Snoopy on January 1, 20X8, as well as any normal equity method entry(ies) related to the investment in Snoopy Company during 20X8. b. Prepare a consolidation worksheet for 20X8.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Peanut Company acquired 100 percent of Snoopy Company's outstanding common stock for $310,000 on January 1,
20X8, when the book value of Snoopy's net assets was equal to $310,000. 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
Debit
Credit
Cash
$ 133,000
Snoopy Company
Debit
$ 82,000
Credit
Accounts Receivable
171,000
Inventory
211,000
71,000
79,000
Investment in Snoopy Company
325,000
0
Land
207,000
96,000
Buildings and Equipment
711,000
185,000
Cost of Goods Sold
218,000
144,000
Depreciation Expense
50,000
17,000
Selling and Administrative Expense
227,000
48,000
Dividends Declared
115,000
38,000
Accumulated Depreciation
$ 434,000
$ 34,000
Accounts Payable
73,000
58,000
Bonds Payable
189,000
96,000
Common Stock
488,000
217,000
Retained Earnings
340,000
93,000
Sales
791,000
Income from Snoopy Company
53,000
262,000
0
Total
$ 2,368,000
$ 2,368,000
$ 760,000
$ 760,000
(Assume the company prepares the optional Accumulated Depreciation Elimination Entry)
Required:
a. Prepare the journal entries on Peanut's books for the acquisition of Snoopy on January 1, 20X8, as well as any normal
equity method entry(ies) related to the investment in Snoopy Company during 20X8.
b. Prepare a consolidation worksheet for 20X8.
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