Concept explainers
a.
Concept introduction
The consolidated balance sheet and the worksheets are the computed tools that are used to calculate the
To prepare: A
a.
Answer to Problem 2.27BP
The journal entry so passed gives a debit of investment and credit the cash with the same amount.
Explanation of Solution
Particular | Debit | Credit |
Cost method entry on books | ||
Investment in S co. | ||
Cash | ||
The initial investment in S co. income | ||
Cash | ||
Investment in the S co. | ||
Record P co. share in S co. dividend | ||
Total |
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 2.27BP
The consolidated worksheet is prepared and discussed.
Explanation of Solution
Book value calculation | |||||
Total book value | = | Common stock | + | Retained earnings | |
Initial 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 S co | |||||
Land | |||||
Building and equipment | |||||
Less accumulated depreciation | |||||
Total assets | |||||
Account payable | |||||
Bonds | |||||
Common stocks | |||||
Retained earnings | |||||
Total liabilities |
Want to see more full solutions like this?
Chapter 2 Solutions
Advanced Financial Accounting
- Peanut Company acquired 100 percent of Snoopy Company's outstanding common stock for $313,000 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $313,000. Peanut uses the equity method to account for investments Trial balance data for Peanut and Snoopy as of December 31, 20X8, are as follows: Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings & Equipment. Cost of Goods Sold Depreciation Expense Selling & Administrative Expense. Dividends Declared i Accumulated Depreciation Accounts Payable Bonds Payable Comeon Stock Retained Earnings Sales Income from Snoopy Company Total Peanut Company Debit $ 149,000 178,000 204,000 328,000 214,000 700,000 204,000 63,000 225,000 107,000 Credit $443,000 59,000 193,000 493,000 352,000 750,000 $2,000 $3,372,000 $2,372,000 Snoopy Company Debit Credit $ 73,000 75,000 81,000 0 97,000 188,000 145,000 14,000 51,000 37,000 $ 25,000 44,000 114,000 204,000 109,000 262,000 $761,000 $761,000 (Assume the company…arrow_forwardPeanut 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. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, are as follows: Peanut Company Snoopy Company Debit Credit Debit Credit Cash $ 130,000 $ 80,000 Accounts Receivable 165,000 65,000 Inventory 200,000 75,000 Investment in Snoopy Company 355,000 0 Land 200,000 100,000 Buildings and Equipment 700,000 200,000 Cost of Goods Sold 200,000 125,000 Depreciation Expense 50,000 10,000 Selling and Administrative Expense 225,000 40,000 Dividends Declared 100,000 20,000 Accumulated Depreciation $ 450,000 $ 20,000 Accounts Payable 75,000 60,000 Bonds Payable 200,000 85,000 Common Stock 500,000 200,000 Retained Earnings 225,000 100,000 Sales 800,000…arrow_forwardPeanut Company acquired 90 percent of Snoopy Company's outstanding common stock for $317,700 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $353,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, follow: Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings and Equipment Cost of Goods Sold Depreciation Expense Selling & Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Snoopy Company Total Peanut Company Debit $ 171,000 170,000 220,000 360,000 206,000 717,000 191,000 48,000 210,000 96,000 $ 2,389,000 Credit $ 435,000 60,000 187,000 480,000 360,100 794,000 72,900 $ 2,389,000 Debit Snoopy Company $ 90,000 69,000 89,000 89,000 192,000 105,000 8,000 48,000 34,000 $724,000 Credit $ 16,000 45,000 68,000 181,000 172,000 242,000 0 $724,000 Required: a. Prepare any…arrow_forward
- Peanut Company acquired 90 percent of Snoopy Company's outstanding common stock for $310,500 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $345,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, follow: Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings and Equipment Cost of Goods Sold Depreciation Expense Selling & Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Snoopy Company Total Peanut Company Debit $ 174,000 181,000 211,000 353,700 206,000 707,000 187,000 41,000 220,000 89.000 $2,369,700 Credit $450,000 63,000 188,000 492,000 313,900 789,000 73.800 $2,369,700 Snoopy Company Debit $ 87,000 82,000 76,000 95,000 188,000 120,000 9,000 27,000 34,000 $718,000 Credit $18,000 48,000 69,000 196,000 149,000 238,000 0 $718,000 Required: a. Prepare any equity…arrow_forwardP Inc. purchased 81% of the voting shares of S Inc for $696,143 cash on January 1, year 2. P recorded Investment in S at cost. The Balance Sheet of P Inc. & S Inc. for year 5 showed the following balances P Inc. S Inc. Investment $696,143 $90,653 What is the amount for Investment on Consolidated Balance Sheet of P Inc. for year5?arrow_forwardPeanut 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…arrow_forward
- 4 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 eguity 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 Credit Debit Credit Debit $ 272,000 $ 77,000 82, 000 Cash Accounts Receivable 200, eee Inventory 193,e00 319,800 216,e00 706,000 118,000 Investment in Snoopy Company Land 81,000 Buildings and Equipment 199, 000 155,000 13,000 54, 250 34,000 Cost of Goods Sold 375,000 Depreciation Expense Selling & Administrative Expense Dividends Declared 47,000 221,000 224,e00 $ 487,000 $ 39,e00 Accumulated Depreciation Accounts Payable Bonds Payable 55,000 39,e00 137,000 79,250 Common Stock Retained Earnings 491,000 682,400 187,e00 158,eee 319, e00 Sales 844,000 Income from Snoopy Company 77,400 Total $2,773,800…arrow_forwardOn December 31, 20X8, Paragraph Corporation acquired 80 percent of Sentence Company's common stock for $136,000. At the acquisition date, the book values and fair values of all of Sentence's assets and liabilities were equal. Paragraph uses the equity method in accounting for its investment. Balance sheet information provided by the companies at December 31, 20X8, immediately following the acquisition is as follows: Cash Accounts Receivable Inventory Fixed Assets (net) Investment in Sentence Co. Total Debits Accounts Payable Notes Payable Common Stock Retained Earnings Total Credits Assets Paragraph Corporation $ 74,000 120,000 180,000 Total Assets Liabilities and Stockholders' Equity 350,000 136,000 $860,000 Total Liabilities and Stockholders' Equity $ 65,000 350,000 150,000 295,000 $860,000 PARAGRAPH CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X8 Required: Prepare a consolidated balance sheet for Paragraph at December 31, 20X8. Sentence Company $ 20,000…arrow_forwardPeanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for $270,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equal to $300,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, follow: Peanut Company Snoopy Company Debit Credit Debit Credit Cash $ 158,000 $ 80,000 Accounts Receivable 165,000 65,000 Inventory 200,000 75,000 Investment in Snoopy Company 319,500 0 Land 200,000 100,000 Buildings and Equipment 700,000 200,000 Cost of Goods Sold 200,000 125,000 Depreciation Expense 50,000 10,000 Selling & Administrative Expense 225,000 40,000 Dividends Declared 100,000 20,000 Accumulated Depreciation $ 450,000 $ 20,000 Accounts Payable 75,000 60,000 Bonds Payable 200,000 85,000 Common Stock 500,000 200,000 Retained Earnings 225,000 100,000 Sales 800,000 250,000…arrow_forward
- Peanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for $270,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equal to $300,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, follow: Peanut Company Snoopy Company Debit Credit Debit Credit Cash $ 158,000 $ 80,000 Accounts Receivable 165,000 65,000 Inventory 200,000 75,000 Investment in Snoopy Company 319,500 0 Land 200,000 100,000 Buildings and Equipment 700,000 200,000 Cost of Goods Sold 200,000 125,000 Depreciation Expense 50,000 10,000 Selling & Administrative Expense 225,000 40,000 Dividends Declared 100,000 20,000 Accumulated Depreciation $ 450,000 $ 20,000 Accounts Payable 75,000 60,000 Bonds Payable 200,000 85,000 Common Stock 500,000 200,000 Retained Earnings 225,000 100,000 Sales 800,000 250,000…arrow_forwardPower Corporation acquired 70 percent of Silk Corporation’s common stock on December 31, 20x2. Balance sheet datafor the two companies immediately following acquisition follow 4. What amount of investment in Silk will be reported?A. P 0 C. P 150,500B. P 140,000 D. P 215,0005. What amount of liabilities will be reported?A. P265,000 C. P 622,000B. P 436,500 D. P 701,5006. What amount will be reported as non-controlling interest?A. P 42,000 C. P 60,900B. P 52,500 D. P 64,500arrow_forwardInstructions At a total cost of $6,950,000, Herrera Corporation acquired 229,500 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 850,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: A. Journalize the entries by Herrera Corporation on December 31 to record the following information (refer to the Chart of Accounts for exact wording of account titles): 1. Tran Corp. reports net income of $974,000 for the current period. 2. A cash dividend of $0.28 per common share is paid by Tran Corp. during the current period. B. Why is the equity method appropriate for the Tran Corp. investment?arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education