1. On January 1, 20X7, Sword reported net assets with a book value of $124,000. A total of $21,000 of the acquisition price is appliedto goodwill, which was not impaired in 20X7.2. Sword's depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fairvalue and book value of tangible assets is related entirely to buildings and equipment.3. Prince used the equity-method in accounting for its investment in Sword.4. Detailed analysis of receivables and payables showed that Sword owed Prince $28,000 on December 31, 20X7.Required:a. Prepare all journal entries recorded by Prince with regard to its investment in Sword during 2OX7. (If no entry is required for atransaction/event, select "No journal entry required" in the first account field.) Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $178,000. The trial balances for the twocompanies on December 31, 20X7, included the following amounts:Prince CorporationSword CompanyItemDebitCreditDebitCredit$ 34,00066,000118,00029,000157,000Cash$93,00061,000175,00091,000494,000228,000494,00023,00060,00069,000Accounts ReceivableInventoryLandBuildings and EquipmentInvestment in Sword CompanyCost of Goods SoldDepreciation Expenseother ExpensesDividends Declared255,00013,00060,00021,000$ 151,00059,000181,000294,000342,000690,00071,000$ 65,000Accumulated DepreciationAccounts PayableMortgages PayableCommon StockRetained Earnings33,000129,00042,00082,000402,000SalesIncome from Sword Company$1,788,000$1,788,000$753,000$753,000Additional Information

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Prince Corporation acquired 1O0 percent of Sword Company on January 1, 20X7, for $178,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Sword Company Prince Corporation Credit Debit Credit Debit $ 34,000 66,000 118,000 29,000 157,000 Item Cash Accounts Receivable Inventory Land Buildings and Equipment Investment in Sword Company Cost of Goods Sold Depreciation Expense other Expenses 93,000 61,000 175,000 91,000 494,000 228,000 494,000 23,000 60,000 69,000 2$ 255,000 13,000 60,000 21,000 Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Common Stock Retained Earnings Sales Income from Sword Company $ 151,000 59,000 181,000 294,000 342,000 690,000 71,000 $1,788,000 $ 65,000 33,000 129,000 42,000 82,000 402,000 $1,788,000 $753,000 $753,000

Prince Corporation acquired 1O0 percent of Sword Company on January 1, 20X7, for $178,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Sword Company Prince Corporation Credit Debit Credit Debit $ 34,000 66,000 118,000 29,000 157,000 Item Cash Accounts Receivable Inventory Land Buildings and Equipment Investment in Sword Company Cost of Goods Sold Depreciation Expense other Expenses 93,000 61,000 175,000 91,000 494,000 228,000 494,000 23,000 60,000 69,000 2$ 255,000 13,000 60,000 21,000 Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Common Stock Retained Earnings Sales Income from Sword Company $ 151,000 59,000 181,000 294,000 342,000 690,000 71,000 $1,788,000 $ 65,000 33,000 129,000 42,000 82,000 402,000 $1,788,000 $753,000 $753,000

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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