Penn Corporation purchased 80 percent ownership of State Company on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of State. On January 1, 20X4, Penn sold 2,000 shares of State's stock for $70,000 to Nonaffiliated Company and recorded a $15,000 increase in additional paid-in capital. Trial balances for the companies on December 31, 20X4, contain the following data: Penn Corporation State Company Debit Credit $ 40,000 Cash Accounts Receivable 71,000 Inventory 120,000 Buildings and Equipment 680,000 Investment in State Company 173,400 Cost of Goods Sold 208,000 Depreciation Expense 24,000 Other Expenses 27,000 Dividends Declared 17,000 Accumulated Depreciation Accounts Payable Bonds Payable Common Stock ($10 par) Additional Paid-In Capital Retained Earnings $ 169,000 175,000 175,000 200,000 72,000 280,000 275,000 14,400 Debit $ 45,000 51,000 100,000 240,000 98,000 19,000 31,000 12,000 Credit Prepare the consolidation entries needed to complete a worksheet for 20X4. Prepare a consolidation worksheet for 20X4 $ 94,000 33,000 20,000 100,000 27,000 150,000 172,000 Sales Income from State Total $ 1,360,400 $ 1,360,400 $ 596,000 $596,000 State's net income was earned evenly throughout the year. Both companies declared and paid their dividends on December 31, 20X4. Penn uses the equity method in accounting for its investment in State. Required:
Penn Corporation purchased 80 percent ownership of State Company on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of State. On January 1, 20X4, Penn sold 2,000 shares of State's stock for $70,000 to Nonaffiliated Company and recorded a $15,000 increase in additional paid-in capital. Trial balances for the companies on December 31, 20X4, contain the following data: Penn Corporation State Company Debit Credit $ 40,000 Cash Accounts Receivable 71,000 Inventory 120,000 Buildings and Equipment 680,000 Investment in State Company 173,400 Cost of Goods Sold 208,000 Depreciation Expense 24,000 Other Expenses 27,000 Dividends Declared 17,000 Accumulated Depreciation Accounts Payable Bonds Payable Common Stock ($10 par) Additional Paid-In Capital Retained Earnings $ 169,000 175,000 175,000 200,000 72,000 280,000 275,000 14,400 Debit $ 45,000 51,000 100,000 240,000 98,000 19,000 31,000 12,000 Credit Prepare the consolidation entries needed to complete a worksheet for 20X4. Prepare a consolidation worksheet for 20X4 $ 94,000 33,000 20,000 100,000 27,000 150,000 172,000 Sales Income from State Total $ 1,360,400 $ 1,360,400 $ 596,000 $596,000 State's net income was earned evenly throughout the year. Both companies declared and paid their dividends on December 31, 20X4. Penn uses the equity method in accounting for its investment in State. Required:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
M 11
Transcribed Image Text:Penn Corporation purchased 80 percent ownership of State Company on January 1, 20X2, at underlying book value. At
that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of State. On January 1,
20X4, Penn sold 2,000 shares of State's stock for $70,000 to Nonaffiliated Company and recorded a $15,000 increase in
additional paid-in capital. Trial balances for the companies on December 31, 20X4, contain the following data:
Credit
Cash
Accounts Receivable
Depreciation Expense
Other Expenses
Dividends Declared
Accumulated Depreciation
Penn Corporation State Company
Debit
Credit
$ 40,000
Inventory
120,000
Buildings and Equipment 680,000
Investment in State Company
173,400
Cost of Goods Sold
208,000
24,000
27,000
17,000
Accounts Payable
Bonds Payable
Common Stock ($10 par)
Additional Paid-In Capital
Retained Earnings
71,000
$ 169,000
175,000
175,000
200,000
72,000
280,000
275,000
14,400
Debit
$ 45,000
51,000
100,000
240,000
98,000
19,000
31,000
12,000
$ 94,000
33,000
20,000
100,000
27,000
150,000
172,000
Sales
Income from State
Total
$ 1,360,400
$ 1,360,400 $ 596,000 $ 596,000
State's net income was earned evenly throughout the year. Both companies declared and paid their dividends on
December 31, 20X4. Penn uses the equity method in accounting for its investment in State.
Required:
Prepare the consolidation entries needed to complete a worksheet for 20X4.
Prepare a consolidation worksheet for 20X4
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 3 steps with 2 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education