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 $300,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, follow: Peanut CompanySnoopy CompanyDebitCreditDebitCreditCash$ 158,000 $ 80,000 Accounts Receivable165,000 65,000 Inventory200,000 75,000 Investment in Snoopy Company319,500 0 Land200,000 100,000 Buildings and Equipment700,000 200,000 Cost of Goods Sold200,000 125,000 Depreciation Expense50,000 10,000 Selling & Administrative Expense225,000 40,000 Dividends Declared100,000 20,000 Accumulated Depreciation $ 450,000 $ 20,000Accounts Payable 75,000 60,000Bonds Payable 200,000 85,000Common Stock 500,000 200,000Retained Earnings 225,000 100,000Sales 800,000 250,000Income from Snoopy Company 67,500 0Total$ 2,317,500$ 2,317,500$ 715,000$ 715,000Required:Prepare any equity method entry(ies) related to the investment in Snoopy Company during 20X8.Prepare a consolidation worksheet for 20X8. Assume the company prepares the optional Accumulated Depreciation Consolidation Entry.

When one company decides to takeover the another company (subsidiary company), the parent company…

Answered: Peanut Company acquired 90 percent of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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:

Debit	Credit	Debit	Credit
	Peanut Company	Snoopy Company
Cash	$ 158,000		$ 80,000
Accounts Receivable	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
Depreciation Expense	50,000		10,000
Selling & Administrative Expense	225,000		40,000
Dividends Declared	100,000		20,000
Accumulated Depreciation		$ 450,000		$ 20,000
Accounts Payable		75,000		60,000
Bonds Payable		200,000		85,000
Common Stock		500,000		200,000
Retained Earnings		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.
Prepare a consolidation worksheet for 20X8. Assume the company prepares the optional Accumulated Depreciation Consolidation Entry.

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