N1 Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $186,000. The trial balances for the twocompanies on December 31, 20X7, Included the following amounts:ItemCashAccounts ReceivableInventoryLandBuildings and EquipmentInvestment in Sword CompanyCost of Goods SoldDepreciation Expenseother ExpensesDividends DeclaredAccumulated DepreciationAccounts PayableMortgages PayableCommon stockRetained EarningsSalesIncome from Sword CompanyAdditional InformationView transaction list1. 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 appliedto goodwill, which was not Impaired In 20X7.Journal entry worksheet2. Sword's depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fairvalue 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 $15,000 on December 31, 20X7.Required:a. Prepare all journal entries recorded by Prince with regard to Its Investment in Sword during 20X7. (If no entry is required for atransaction/event, select "No Journal entry required" In the first account field.)Record Prince Corp's share of Sword Co.'s 20X7 income.Note: Enter debits before credits.EventBEvent2Note: Enter debits before credits.Record entryPrince CorporationDebitCredit$ 86,00066,000190,000190,000112,00084,00038,000497,000153,000251,000497,000255,00023,00013,000IN57,08857,88857,00021,000$ 147,00064,000198,000286,000341,000686,00086,000$1,800,000 $1,806,000Record Prince Corp's share of Sword Co.'s 20X7 income.view transaction list< AInvestment in Sword CompanyIncome from Sword CompanyEvent2General JournalBConsolidation WorksheetEntriesRecord entryсIncome StatementSalesLess: COGSLess: Depreciation expenseLess: Other expensesIncome from Sword Co.Net IncomeStatement of Retained EarningsBeginning balanceNet incomeLess: Dividends declaredNote: Enter debits before credits.Ending BalanceBalance SheetAssetsCashAccounts receivableInventoryLandBuildings & equipmentLess: Accumulated depreciationInvestment in Sword Co.GoodwillTotal AssetsLiabilities & EquityAccounts payableMortgages payableCommon stockRetained earningsTotal Liabilities & EquityGeneral Journalb. Prepare all consolidating entries needed to prepare a full set of consolidated financial statements for 20X7. (If no entfor a transaction/event, select "No Journal entry required" in the first account field.)Clear entryRecord the amortized excess value reclassification entry.SD ES$SAccountsPrince CorpClear entryPRINCE CORPORATION AND SUBSIDIARYConsolidated Financial Statements WorksheetDecember 31, 20X7Debit0 $Sword CompanyDebitCredit$ 43,0000 S0 $0 $Sword Co71,000132,00047,00085,000414,000$763,000 $763,000c. 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 "ConsolidationEntries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine alldebit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries intoone amount and enter this amount in the credit column of the worksheet.)0 S0 S0 $Credit0 S$ 65,00020,000DRDebit251,000DebitView general journal0 S0>Creditview consolidation entriesConsolidation EntriesCR251,000S0 S0 SCreditConsolidated0 S0 S>0 $0 S000

Consolidation Statement In the consolidation statement the parent company acquired the subsidiary…

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

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

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