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Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $408,000. At that date, the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheet data: Assets Total $ 700,000 Accounts Payable Bonds Payable Common Stock Retained Earnings $ 700,000 Total $ 95,000 197,000 124,000 284,000 $ 700,000 Round reported net income of $74,000 for 20X2 and paid dividends of $22,000. Required: a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using the equity method. b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements.

Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $408,000. At that date, the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheet data: Assets Total $ 700,000 Accounts Payable Bonds Payable Common Stock Retained Earnings $ 700,000 Total $ 95,000 197,000 124,000 284,000 $ 700,000 Round reported net income of $74,000 for 20X2 and paid dividends of $22,000. Required: a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using the equity method. b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements.

FINANCIAL ACCOUNTING
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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Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $408,000. At that date, the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheet data: Assets Total $ 700,000 Accounts Payable Bonds Payable Common Stock Retained Earnings $ 700,000 Total $ 95,000 197,000 124,000 284,000 $ 700,000 Round reported net income of $74,000 for 20X2 and paid dividends of $22,000. Required: a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using the equity method. b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements.
Transcribed Image Text:Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $408,000. At that date, the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheet data: Assets Total $ 700,000 Accounts Payable Bonds Payable Common Stock Retained Earnings $ 700,000 Total $ 95,000 197,000 124,000 284,000 $ 700,000 Round reported net income of $74,000 for 20X2 and paid dividends of $22,000. Required: a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using the equity method. b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements.
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