Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $713,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $641,000. Credit balances are indicated by parentheses.
Adams
Clay
Current assets
$
382,000
$
272,000
Investment in Clay
713,300
0
Equipment
837,000
584,000
Liabilities
(202,000
)
(224,000
)
Common stock
(350,000
)
(150,000
)
Retained earnings, 1/1/20
(1,380,300
)
(482,000
)
In 2020, Clay earns a net income of $74,100 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $160,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows:
Adams
Clay
Revenues
$
(544,000
)
$
(286,000
)
Expenses
394,400
214,500
Investment…
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $713,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $641,000. Credit balances are indicated by parentheses.
Adams
Clay
Current assets
$
382,000
$
272,000
Investment in Clay
713,300
0
Equipment
837,000
584,000
Liabilities
(202,000
)
(224,000
)
Common stock
(350,000
)
(150,000
)
Retained earnings, 1/1/20
(1,380,300
)
(482,000
)
In 2020, Clay earns a net income of $74,100 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $160,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows:
Adams
Clay
Revenues
$
(544,000
)
$
(286,000
)
Expenses
394,400
214,500
Investment…
On January 1, 2025, Vaughn Corporation purchased 20% of the common shares of Bramble Company for
$196,000. During the year, Bramble earned net income of $77,000 and paid dividends of $19,250.
Prepare the entries for Vaughn to record the purchase and any additional entries related to this
investment in Bramble Company in 2025. (List all debit entries before credit entries. Credit account titles
are automatically indented when amount is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter o for the amounts.)
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