FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Swaps
A swap is a derivative contract in which two parties are agreed to exchange their cash flows from two different financial instruments for a defined period. In swap contracts, cash flows from one financial instrument are fixed and cash flow from other fin…
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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
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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
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