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 Cash Accounts Receivable Inventory Investment in Snoopy Company 200 Land But 1 Buildings and Equipment 200 Cost of Goods Sold Depreciation Expense Depr Selling & Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Snoopy Company Total Debit $ 158,000 165,000 200,000 319,500 200,000 700,000 200,000 50,000 225,000 100,000 $2,317,500 Credit 450,000 75,000 200,000 500,000 225,000 800,000 67,500 $2,317,500 Snoopy Company Debit $ 80,000 65,000 75,000 200 100,000 200,000 125,000 10,000 40,000 20,000 $715,000 Credit 20,000 60,000 85,000 200,000 100,000 250,000 0 $715,000

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 Cash Accounts Receivable Inventory Investment in Snoopy Company 200 Land But 1 Buildings and Equipment 200 Cost of Goods Sold Depreciation Expense Depr Selling & Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Snoopy Company Total Debit $ 158,000 165,000 200,000 319,500 200,000 700,000 200,000 50,000 225,000 100,000 $2,317,500 Credit 450,000 75,000 200,000 500,000 225,000 800,000 67,500 $2,317,500 Snoopy Company Debit $ 80,000 65,000 75,000 200 100,000 200,000 125,000 10,000 40,000 20,000 $715,000 Credit 20,000 60,000 85,000 200,000 100,000 250,000 0 $715,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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