1. On January 1, 20X7, Sword reported net assets with a book value of $132,000. A total of $21,000 of the acquisition price is applied to goodwill, which was not Impaired in 20X7. 2. Sword's depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment. 3. Prince used the equity-method in accounting for its Investment in Sword. 4. Detailed analysis of receivables and payables showed that Sword owed Prince $15,000 on December 31, 20X7. Required: a. Prepare all journal entries recorded by Prince with regard to its Investment in Sword during 20X7. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.) View transaction list

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

N1

Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $186,000. The trial balances for the two
companies on December 31, 20X7, Included the following amounts:
Item
Cash
Accounts Receivable
Inventory
Land
Buildings and Equipment
Investment in Sword Company
Cost of Goods Sold
Depreciation Expense
other Expenses
Dividends Declared
Accumulated Depreciation
Accounts Payable
Mortgages Payable
Common stock
Retained Earnings
Sales
Income from Sword Company
Additional Information
View transaction list
1. On January 1, 20X7, Sword reported net assets with a book value of $132,000. A total of $21,000 of the acquisition price is applied
to goodwill, which was not Impaired In 20X7.
Journal entry worksheet
2. Sword's depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair
value and book value of tangible assets is related entirely to buildings and equipment.
3. Prince used the equity-method in accounting for its Investment In Sword.
4. Detailed analysis of receivables and payables showed that Sword owed Prince $15,000 on December 31, 20X7.
Required:
a. Prepare all journal entries recorded by Prince with regard to Its Investment in Sword during 20X7. (If no entry is required for a
transaction/event, select "No Journal entry required" In the first account field.)
Record Prince Corp's share of Sword Co.'s 20X7 income.
Note: Enter debits before credits.
Event
B
Event
2
Note: Enter debits before credits.
Record entry
Prince Corporation
Debit
Credit
$ 86,000
66,000
190,000
190,000
112,000
84,000
38,000
497,000
153,000
251,000
497,000
255,000
23,000
13,000
IN
57,088
57,888
57,000
21,000
$ 147,000
64,000
198,000
286,000
341,000
686,000
86,000
$1,800,000 $1,806,000
Record Prince Corp's share of Sword Co.'s 20X7 income.
view transaction list
< A
Investment in Sword Company
Income from Sword Company
Event
2
General Journal
B
Consolidation Worksheet
Entries
Record entry
с
Income Statement
Sales
Less: COGS
Less: Depreciation expense
Less: Other expenses
Income from Sword Co.
Net Income
Statement of Retained Earnings
Beginning balance
Net income
Less: Dividends declared
Note: Enter debits before credits.
Ending Balance
Balance Sheet
Assets
Cash
Accounts receivable
Inventory
Land
Buildings & equipment
Less: Accumulated depreciation
Investment in Sword Co.
Goodwill
Total Assets
Liabilities & Equity
Accounts payable
Mortgages payable
Common stock
Retained earnings
Total Liabilities & Equity
General Journal
b. Prepare all consolidating entries needed to prepare a full set of consolidated financial statements for 20X7. (If no ent
for a transaction/event, select "No Journal entry required" in the first account field.)
Clear entry
Record the amortized excess value reclassification entry.
S
D E
S
$
S
Accounts
Prince Corp
Clear entry
PRINCE CORPORATION AND SUBSIDIARY
Consolidated Financial Statements Worksheet
December 31, 20X7
Debit
0 $
Sword Company
Debit
Credit
$ 43,000
0 S
0 $
0 $
Sword Co
71,000
132,000
47,000
85,000
414,000
$763,000 $763,000
c. Prepare a three-part consolidation worksheet as of December 31, 20X7. (Values in the first two columns (the "parent" and
"subsidiary" balances) that are to be deducted should be Indicated with a minus sign, while all values in the "Consolidation
Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all
debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into
one amount and enter this amount in the credit column of the worksheet.)
0 S
0 S
0 $
Credit
0 S
$ 65,000
20,000
DR
Debit
251,000
Debit
View general journal
0 S
0
>
Credit
view consolidation entries
Consolidation Entries
CR
251,000
S
0 S
0 S
Credit
Consolidated
0 S
0 S
>
0 $
0 S
0
0
0
Transcribed Image Text:Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $186,000. The trial balances for the two companies on December 31, 20X7, Included the following amounts: Item Cash Accounts Receivable Inventory Land Buildings and Equipment Investment in Sword Company Cost of Goods Sold Depreciation Expense other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Common stock Retained Earnings Sales Income from Sword Company Additional Information View transaction list 1. On January 1, 20X7, Sword reported net assets with a book value of $132,000. A total of $21,000 of the acquisition price is applied to goodwill, which was not Impaired In 20X7. Journal entry worksheet 2. Sword's depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment. 3. Prince used the equity-method in accounting for its Investment In Sword. 4. Detailed analysis of receivables and payables showed that Sword owed Prince $15,000 on December 31, 20X7. Required: a. Prepare all journal entries recorded by Prince with regard to Its Investment in Sword during 20X7. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.) Record Prince Corp's share of Sword Co.'s 20X7 income. Note: Enter debits before credits. Event B Event 2 Note: Enter debits before credits. Record entry Prince Corporation Debit Credit $ 86,000 66,000 190,000 190,000 112,000 84,000 38,000 497,000 153,000 251,000 497,000 255,000 23,000 13,000 IN 57,088 57,888 57,000 21,000 $ 147,000 64,000 198,000 286,000 341,000 686,000 86,000 $1,800,000 $1,806,000 Record Prince Corp's share of Sword Co.'s 20X7 income. view transaction list < A Investment in Sword Company Income from Sword Company Event 2 General Journal B Consolidation Worksheet Entries Record entry с Income Statement Sales Less: COGS Less: Depreciation expense Less: Other expenses Income from Sword Co. Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Note: Enter debits before credits. Ending Balance Balance Sheet Assets Cash Accounts receivable Inventory Land Buildings & equipment Less: Accumulated depreciation Investment in Sword Co. Goodwill Total Assets Liabilities & Equity Accounts payable Mortgages payable Common stock Retained earnings Total Liabilities & Equity General Journal b. Prepare all consolidating entries needed to prepare a full set of consolidated financial statements for 20X7. (If no ent for a transaction/event, select "No Journal entry required" in the first account field.) Clear entry Record the amortized excess value reclassification entry. S D E S $ S Accounts Prince Corp Clear entry PRINCE CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X7 Debit 0 $ Sword Company Debit Credit $ 43,000 0 S 0 $ 0 $ Sword Co 71,000 132,000 47,000 85,000 414,000 $763,000 $763,000 c. Prepare a three-part consolidation worksheet as of December 31, 20X7. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be Indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) 0 S 0 S 0 $ Credit 0 S $ 65,000 20,000 DR Debit 251,000 Debit View general journal 0 S 0 > Credit view consolidation entries Consolidation Entries CR 251,000 S 0 S 0 S Credit Consolidated 0 S 0 S > 0 $ 0 S 0 0 0
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Swaps
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education