Peanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for $270,000 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, follow: Peanut Company Snoopy Company Debit
Peanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for $270,000 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, follow: Peanut Company Snoopy Company Debit
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 28E
Related questions
Question
Peanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for $270,000 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.
Peanut Company | Snoopy Company | |||
---|---|---|---|---|
Debit | Credit | Debit | Credit | |
Cash | $ 158,000 | $ 80,000 | ||
165,000 | 65,000 | |||
Inventory | 200,000 | 75,000 | ||
Investment in Snoopy Company | 319,500 | 0 | ||
Land | 200,000 | 100,000 | ||
Buildings and Equipment | 700,000 | 200,000 | ||
Cost of Goods Sold | 200,000 | 125,000 | ||
50,000 | 10,000 | |||
Selling & Administrative Expense | 225,000 | 40,000 | ||
Dividends Declared | 100,000 | 20,000 | ||
$ 450,000 | $ 20,000 | |||
Accounts Payable | 75,000 | 60,000 | ||
Bonds Payable | 200,000 | 85,000 | ||
Common Stock | 500,000 | 200,000 | ||
225,000 | 100,000 | |||
Sales | 800,000 | 250,000 | ||
Income from Snoopy Company | 67,500 | 0 | ||
Total | $ 2,317,500 | $ 2,317,500 | $ 715,000 | $ 715,000 |
Required:
-
Prepare any equity method entry(ies) related to the investment in Snoopy Company during 20X8.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Recommended textbooks for you
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning