Post Company Sign Company Item Debit Credit Debit Credit Cash 10,000 15,000 Accounts Receivable 33,000 20,000 Inventory 260,000 80,000 Land 80,000 80,000 Buildings and Equipment 500,000 150,000 Investment in Sign Company 215,000 Cost of Goods Sold 120,000 50,000 Depreciation Expense 25,000 15,000 Other Expenses 15,000 5,000 Dividends Declared 30,000 10,000 Accumulated Depreciation 205,000 105,000 Accounts Payable 40,000 20,000 Notes Payable 200,000 50,000 Common Stock 300,000 100,000 Retained Earnings 318,000 50,000 Sales 200,000 100,000 Income from Sign Company 25,000 $ 1,288,000 $ 1,288,000 $ 425,000 $ 425,000 Additional Information: 1. Post Company acquired 100 percent ownership of Sign Company on January 1, 20X8 for $200,000. The book value of Sign's net assets at acquisition was $150,000. 2. The book value and fair values of Sign's assets and liabilities were equal, except for Sign's buildings and equipment, which were worth $50,000 more than book value. Buildings and equipment are depreciated on a 10-year basis. 3. Accumulated depreciation on the buildings and equipment was $90,000 on the acquisition date. 4. There was $5,000 of intercompany receivables and payables at the end of 20X8. 5. Post uses the equity method in accounting for its investment in Sign. REQUIRED: prepare the equity method entries related to the investment in Sign Company during 20X8. Prepare the consolidation entries for Post's investment in Sign Company for December 31, 20X8.

Name: Post Company Sign Company Item Debit Credit Debit Credit Cash 10,000 1
Uploaded: 2024-03-04T10:43:15.000Z
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Description: Post Company Sign Company Item Debit Credit Debit Credit Cash 10,000 15,000 Accounts Receivable 33,000 20,000 Inventory 260,000 80,000 Land 80,000 80,000 Buildings and Equipment 500,000 150,000 Investment in Sign Company 215,000 Cost of Goods Sold 12

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Post Company Sign Company Item Debit Credit Debit Credit Cash 10,000 15,000 Accounts Receivable 33,000 20,000 Inventory 260,000 80,000 Land 80,000 80,000 Buildings and Equipment 500,000 150,000 Investment in Sign Company 215,000 Cost of Goods Sold 120,000 50,000 Depreciation Expense 25,000 15,000 Other Expenses 15,000 5,000 Dividends Declared 30,000 10,000 Accumulated Depreciation 205,000 105,000 Accounts Payable 40,000 20,000 Notes Payable 200,000 50,000 Common Stock 300,000 100,000 Retained Earnings 318,000 50,000 Sales 200,000 100,000 Income from Sign Company 25,000 $ 1,288,000 $ 1,288,000 $ 425,000 $ 425,000 Additional Information:

1. Post Company acquired 100 percent ownership of Sign Company on January 1, 20X8 for $200,000. The book value of Sign's net assets at acquisition was $150,000. 2. The book value and fair values of Sign's assets and liabilities were equal, except for Sign's buildings and equipment, which were worth $50,000 more than book value. Buildings and equipment are depreciated on a 10-year basis. 3. Accumulated depreciation on the buildings and equipment was $90,000 on the acquisition date. 4. There was $5,000 of intercompany receivables and payables at the end of 20X8. 5. Post uses the equity method in accounting for its investment in Sign.

REQUIRED: prepare the equity method entries related to the investment in Sign Company during 20X8.

Prepare the consolidation entries for Post's investment in Sign Company for December 31, 20X8.

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