Multiple Stock Purchases L02Sarko Company had 300,000 shares of $10 par value common stock outstanding at all times,and retained earnings balances as indicated here:PROBLEM 8-1Retained EarningsJanuary 1, 2010January 1, 2011January 1, 2012January 1, 2013$260,000540,000630,000820,000Pelzer Company acquired Sarko Company stock through open-market purchases as follows:Date% AcquiredSharesCost10%$ 365,0001/1/101/1/111/1/1225%45%80%30,00075,000135,000960,0001,890,000Sarko Company declared no dividends during this period. The fair values of Sarko Com-pany's assets and liabilities were approximately equal to their book values throughout this pe-riod (2010 through 2012). Pelzer Company uses the cost method.Required:A. Prepare a schedule to compare investment cost with the book value of equity acquired.B. Prepare elimination entries for the preparation of a consolidated statements workpaperon December 31, 2012.

A consolidation deed is an accounting document used to show how one business consolidates its…

Sarko Company had 300,000 shares of $10 par value common stock outstanding at all times, and retained earnings balances as indicated here: Retained Earnings January 1, 2010 January 1, 2011 January 1, 2012 January 1, 2013 $260,000 540,000 630,000 820,000 Pelzer Company acquired Sarko Company stock through open-market purchases as follows: Date % Acquired Shares Cost 1/1/10 1/1/11 1/1/12 10% 25% 30,000 75,000 $ 365,000 960,000 45% 80% 135,000 1,890,000 Sarko Company declared no dividends during this period. The fair values of Sarko Com- pany's assets and liabilities were approximately equal to their book values throughout this pe- riod (2010 through 2012). Pelzer Company uses the cost method. Required: A. Prepare a schedule to compare investment cost with the book value of equity acquired. B. Prepare elimination entries for the preparation of a consolidated statements workpaper on December 31, 2012.

Sarko Company had 300,000 shares of $10 par value common stock outstanding at all times, and retained earnings balances as indicated here: Retained Earnings January 1, 2010 January 1, 2011 January 1, 2012 January 1, 2013 $260,000 540,000 630,000 820,000 Pelzer Company acquired Sarko Company stock through open-market purchases as follows: Date % Acquired Shares Cost 1/1/10 1/1/11 1/1/12 10% 25% 30,000 75,000 $ 365,000 960,000 45% 80% 135,000 1,890,000 Sarko Company declared no dividends during this period. The fair values of Sarko Com- pany's assets and liabilities were approximately equal to their book values throughout this pe- riod (2010 through 2012). Pelzer Company uses the cost method. Required: A. Prepare a schedule to compare investment cost with the book value of equity acquired. B. Prepare elimination entries for the preparation of a consolidated statements workpaper on December 31, 2012.

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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