Peanut Company acquired 90 percent of Snoopy Company's outstanding common stock for $323,100 on January 1, 20X8, when th book value of Snoopy's net assets was equal to $359,000. 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 Credit Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings and Equipment Cost of Goods Sold $ 174,000 Debit $ 79,000 Credit 171,000 83,000 217,000 93,000 368,100 215,000 97,000 712,000 198,000 188,000 119,000 Depreciation Expense 44,000 10,000 Selling & Administrative Expense 217,000 40,000 Dividends Declared 96,000 29,000 Accumulated Depreciation Accounts Payable Bonds Payable $ 436,000 62,000 199,000 $ 20,000 47,000 74,000 Common Stock 495,000 186,000 Retained Earnings 356,000 173,000 Sales 783,000 248,000 Income from Snoopy Company 71,100 0 Total $ 2,402,100 $ 2,402,100 $ 748,000 $ 748,000 Required: a. Prepare any equity method entry(ies) related to the investment in Snoopy Company during 20X8. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list 1 Record the initial investment in Snoopy Company. 2 Record Peanut Company's 90% share of Snoopy Company's 20X8 income. 3 Record Peanut Company's 90% share of Snoopy Company's 20X8 dividend. b. Prepare a consolidation worksheet for 20X8. Assume the company prepares the optional Accumulated Depreciation Consolidation Entry. Note: Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. PEANUT COMPANY AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X8 Income Statement Sales Less: COGS Less: Depreciation expense Less: Selling & Administrative Expense Income from Snoopy Company Consolidated net income Noncontrolling interest in net income Controlling Interest in Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Assets Cash Accounts receivable Inventory Investment in Snoopy Company Land Buildings and equipment Accumulated depreciation Total Assets Liabilities & Stockholders' Equity Accounts payable Bonds payable Common stock Retained earnings Noncontrolling interest in net assets of Snoopy Company Total Liabilities & Stockholders' Equity Peanut Company Snoopy Company Debit Consolidation Entries Credit Consolidated

Peanut Company acquired 90 percent of Snoopy Company's outstanding common stock for $323,100 on January 1, 20X8, when th book value of Snoopy's net assets was equal to $359,000. 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 Credit Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings and Equipment Cost of Goods Sold $ 174,000 Debit $ 79,000 Credit 171,000 83,000 217,000 93,000 368,100 215,000 97,000 712,000 198,000 188,000 119,000 Depreciation Expense 44,000 10,000 Selling & Administrative Expense 217,000 40,000 Dividends Declared 96,000 29,000 Accumulated Depreciation Accounts Payable Bonds Payable $ 436,000 62,000 199,000 $ 20,000 47,000 74,000 Common Stock 495,000 186,000 Retained Earnings 356,000 173,000 Sales 783,000 248,000 Income from Snoopy Company 71,100 0 Total $ 2,402,100 $ 2,402,100 $ 748,000 $ 748,000 Required: a. Prepare any equity method entry(ies) related to the investment in Snoopy Company during 20X8. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list 1 Record the initial investment in Snoopy Company. 2 Record Peanut Company's 90% share of Snoopy Company's 20X8 income. 3 Record Peanut Company's 90% share of Snoopy Company's 20X8 dividend. b. Prepare a consolidation worksheet for 20X8. Assume the company prepares the optional Accumulated Depreciation Consolidation Entry. Note: Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. PEANUT COMPANY AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X8 Income Statement Sales Less: COGS Less: Depreciation expense Less: Selling & Administrative Expense Income from Snoopy Company Consolidated net income Noncontrolling interest in net income Controlling Interest in Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Assets Cash Accounts receivable Inventory Investment in Snoopy Company Land Buildings and equipment Accumulated depreciation Total Assets Liabilities & Stockholders' Equity Accounts payable Bonds payable Common stock Retained earnings Noncontrolling interest in net assets of Snoopy Company Total Liabilities & Stockholders' Equity Peanut Company Snoopy Company Debit Consolidation Entries Credit Consolidated

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

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