Concept explainers
a.
Introduction
The consolidated
To prepare: A
a.

Answer to Problem 2.24P
The journal entry so passed gives a debit of investment and credit the cash with the same amount.
Explanation of Solution
Particular | Debit | Credit |
Equity method entry on paper’s co.’s books | ||
Investment in S | 370,000 | |
Cash | 370,000 | |
(Record paper co. | ||
Investment in S | ||
Income received from S company | ||
(Record paper co. | ||
Cash | ||
Investment in the scissor co. | ||
Record paper co. share in scissor co. dividend |
b.
Concept 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
b.

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 | Paper co | Scissor 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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Chapter 2 Solutions
ADVANCED FIN. ACCT.(LL)-W/CONNECT
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