EBK ADVANCED FINANCIAL ACCOUNTING
11th Edition
ISBN: 8220102796096
Author: Christensen
Publisher: YUZU
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Textbook Question
Chapter 2, Problem 2.24P
Consolidated Worksheet at End of the Second Year of Ownership (Equity Method)
Peanut Company acquired 100 percent of Snoopy Company’s outstanding common stock for
$300,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equal to $300,000.
Problem 2-21 summarizes the first year Peanut’s ownership of Snoopy. Peanut uses the equity method to account for investments. The following
Required
a. Prepare any equity-method
b. Prepare a consolidation worksheet for 20X9 in good form.
a.
Expert Solution
To determine
Introduction
The consolidated balance sheet and the worksheets are the computed tools that are used to calculate the retained earnings and the dividend produced by the subsidiaries towards its parent company.
To prepare: A journal entry by equity method for the investment in S company for the year
Explanation of Solution
| Particular | Debit | Credit |
| Equity method entry on books | ||
| Investment in S co. | 300,000 | |
| Cash | 300,000 | |
| Record P co. share of the S co. income | ||
| Investment in S | 80,000 | |
| Income from S | 80,000 | |
| (To record P share in S income ) | ||
| Income from S | ||
| Investment in the S co. | ||
| Record P co. share in S co. Dividend | ||
| Total |
b.
Expert Solution
To determine
Introduction
The consolidated balance sheet and the worksheets are the computed tools that are used to calculate the retained earnings and the dividend produced by the subsidiaries towards its parent company.
To prepare: the consolidated worksheet for the final values
Answer to Problem 2.24P
The consolidated worksheet is prepared and discussed.
Explanation of Solution
| Book value calculation | |||||
| Total book value | = | Common stock | + | Retained earnings | |
| Book value | |||||
| Net income | |||||
| Dividend | |||||
| Ending book value |
| Income statement | P | S | Dr. | Cr. | consolidated |
| Sales | |||||
| Less Cogs | |||||
| Depreciation Exp | |||||
| Sel. Exp | |||||
| Income from S | |||||
| Net income | |||||
| Statement of Retain Earning | P | S | Dr. | Cr. | Consolidated |
| Opening balance | |||||
| Net income | |||||
| Less dividend declared | |||||
| End balance |
| Income statement | P co | S co | Eliminated DR | Eliminated CR | consolidated |
| Cash | |||||
| Accounts received | |||||
| Inventory | |||||
| Investment in scissor co | |||||
| Land | |||||
| Building and equipment | |||||
| Less accumulated depreciation | |||||
| Total assets | |||||
| Account payable | |||||
| Bonds | |||||
| Common stocks | |||||
| Retained earnings | |||||
| Total liabilities |
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Students have asked these similar questions
Peanut Company acquired 80 percent of Snoopy Company’s outstanding common stock for $300,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equal to $375,000. Peanut uses the equity method to account for investments. The following trial balance summarizes the financial position and operations for Peanut and Snoopy as of December 31, 20X9: Peanut Company Snoopy Company Debit Credit Debit Credit Cash $ 269,000 $ 80,000 Accounts Receivable 193,000 85,000 Inventory 196,000 106,000 Investment in Snoopy Company 306,600 0 Land 211,000 85,000 Buildings and Equipment 702,000 194,000 Cost of Goods Sold 375,000 168,000 Depreciation Expense 45,000 20,000 Selling & Administrative Expense 214,000 25,750 Dividends Declared 221,000 49,000 Accumulated Depreciation $ 495,000 $ 60,000 Accounts Payable 66,000 60,000 Bonds Payable 137,000 46,750 Common Stock 496,000 195,000 Retained Earnings 631,800 145,000 Sales 833,000 306,000 Income from Snoopy Company 73,800 0 Total $ 2,732,600…
Subject :- Accounting
The trial balances for Wallace Corporation and Au Inc. at December 31, Year 4, just before the transaction described below, were as
follows:
Current assets
Land
Other tangible assets
Liabilities
Common shares
Retained earnings, 1/1/Year 4
Revenues
Expenses
Land
Other tangible assets
Liabilities
On December 31, Year 4, Wallace purchased all of the outstanding shares of Au Inc. by issuing 39,000 common shares with a market
value of $25 per share. The carrying amounts of Au Inc.'s assets and liabilities were equal to fair value except for the following:
Fair
Value
$527,000
354,000
339,000
Walla
$307,000
627,000
527,000
427,000
227,000
627,000
827,000
647,000
Required:
What are the balances for the land, other tangible assets, goodwill, investment in common shares, liabilities, common shares, and
revenues after the transaction noted above on: (Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your
response.)
(a) Wallace's separate entity financial statements…
Chapter 2 Solutions
EBK ADVANCED FINANCIAL ACCOUNTING
Ch. 2 - What types of investments in common stock normally...Ch. 2 - Prob. 2.2AQCh. 2 - When is equity method reporting considered...Ch. 2 - Prob. 2.4QCh. 2 - Prob. 2.5QCh. 2 - Prob. 2.6QCh. 2 - Prob. 2.7QCh. 2 - Prob. 2.8QCh. 2 - How does carrying securities at fair value...Ch. 2 - How does the fully adjusted equity method differ...
Ch. 2 - Prob. 2.11QCh. 2 - What is the modified equity method? When might a...Ch. 2 - Prob. 2.13AQCh. 2 - Prob. 2.14QCh. 2 - Prob. 2.15QCh. 2 - Prob. 2.16QCh. 2 - Prob. 2.17QCh. 2 - How are a subsidiary’s dividend declarations...Ch. 2 - Prob. 2.19QCh. 2 - Give a definition of consolidated retained...Ch. 2 - Prob. 2.21QCh. 2 - Prob. 2.22QCh. 2 - Choice of Accounting Method Slanted Building...Ch. 2 - Prob. 2.2CCh. 2 - Prob. 2.3ACCh. 2 - Prob. 2.4CCh. 2 - Prob. 2.5CCh. 2 - Prob. 2.6CCh. 2 - Prob. 2.1.1ECh. 2 - Multiple-Choice Questions on Accounting for Equity...Ch. 2 - Prob. 2.1.3ECh. 2 - Prob. 2.1.4ECh. 2 - Prob. 2.1.5ECh. 2 - Prob. 2.1.6ECh. 2 - Multiple-Choice Questions on Intercorporate...Ch. 2 - Prob. 2.2.2ECh. 2 - Prob. 2.3.1ECh. 2 - Prob. 2.3.2ECh. 2 - Prob. 2.3.3ECh. 2 - Prob. 2.3.4ECh. 2 - Cost versus Equity Reporting Winston Corporation...Ch. 2 - Prob. 2.5ECh. 2 - Prob. 2.6ECh. 2 - Prob. 2.7ECh. 2 - Income Reporting Grandview Company purchased 40...Ch. 2 - Prob. 2.9ECh. 2 - Carrying an Investment at Fair Value versus Equity...Ch. 2 - Investee with Preferred Stock Outstanding Reden...Ch. 2 - Prob. 2.12AECh. 2 - Prob. 2.13AECh. 2 - Prob. 2.14ECh. 2 - Prob. 2.15ECh. 2 - Prob. 2.16ECh. 2 - Prob. 2.17ECh. 2 - Changes ¡n the Number of Shares Held Idle...Ch. 2 - Prob. 2.19PCh. 2 - Carried at Fair Value Journal Entries Marlow...Ch. 2 - Prob. 2.21APCh. 2 - Equity-Method Income Statement Wealthy...Ch. 2 - Consolidated Worksheet at End of the First Year of...Ch. 2 - Consolidated Worksheet at End of the Second Year...Ch. 2 - Prob. 2.25PCh. 2 - Prob. 2.26PCh. 2 - Prob. 2.27BPCh. 2 - Prob. 2.28BP
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