please dont provide image in answers Exercise 9-6 (Static) Subsidiary with Preferred Stock Outstanding LO 9-2Playtown Corporation purchased 75 percent of Sandbox Company common stock and 40 percent of its preferred stock on January 1,20X6, for $270,000 and $80,000, respectively. At the time of purchase, the fair value of Sandbox's common shares held by thenoncontrolling interest was $90,000, Sandbox's balance sheet contained the following balances:Preferred Stock ($10 par value)Common Stock ($5 par value)Retained EarningsTotal Stockholders' EquityFor the year ended December 31, 20X6, Sandbox reported net income of $70,000 and paid dividends of $50,000 (which includes thepreferred dividend). The preferred stock is cumulative and pays an annual dividend of 8 percent.Required:a. Prepare the journal entries recorded by Playtown for its investments in Sandbox during 20x6.b. Prepare the consolidation entries needed to prepare the consolidated financial statements for Playtown Corporation as ofDecember 31, 20X6.$ 200,000150,000210,000$ 560,000Complete this question by entering your answers in the tabs below.Required ARequired BPrepare the journal entries recorded by Playtown for its investments in Sandbox during 20x6.Note: If no entry is required for a transaction/event, select "No journal entry required in the first account field.view transaction listA Record the purchase of Sandbox stock.B Record the dividends from Sandbox.c Record the dividends on the preferred stock fromSandbox.DRecord the equity-method income.Credit

Consolidation is the process of merging the financial statements of parent and subsidiary to show…

Answered: Exercise 9-6 (Static) Subsidiary with…

Corporate Financial Accounting

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ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

ChapterD: Investments

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Problem D.7EX

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E9–6Subsidiary with Preferred Stock Outstanding Playtown Corporation purchased 75 percent of Sandbox Company common stock and 40 percent of its preferred stock on January 1, 20X6, for $270,000 and $80,000, respectively. At the time of purchase, the fair value of Sandbox’s common shares held by the noncontrolling interest was $90,000. Sandbox’s balance sheet contained the following balances:Preferred Stock ($10 par value) $200,000Common Stock ($5 par value) 150,000Retained Earnings 210,000Total Stockholders’ Equity $560,000page 486 For the year ended December 31, 20X6, Sandbox reported net income of $70,000 and paid dividends of $50,000 (which includes the preferred dividend). The preferred stock is cumulative and pays an annual dividend of 8 percent.Required Prepare the journal entries recorded by Playtown for its investments in Sandbox during 20X6.Present the consolidation entries needed to prepare the consolidated financial statements for Playtown Corporation as of…
QUESTION 15 On January 1, 20X7, Poke Corporation acquired 25 percent of the outstanding shares of Shove Corporation for $100,000 cash. Shove Company reported net income of $75,000 and paid dividends of $30,000 for both 20X7 and 20X8. The fair value of shares held by Poke was $110,000 and $105,000 on December 31, 20X7 and 20X8 respectively.If instead, Poke could not exercise significant influence over the investee, by what amount will Poke's 20X7 income increase due to its investment in Shove? $7,500 $12,500 $17,500 $11,250
Question 23 Plexis Corporation holds 70 percent of Solar Company's voting common shares, acquired at book value, but none of its preferred shares. At the date of acquisition, the fair value of the noncontrolling interest was equal to 30 percent of the book value of Solar Company. Summary balance sheets for the companies on December 31, 20X5, are as follows: Plexis Corp. Solar Company Cash and Receivables $ 70,000 $ 55,000 Inventory 60,000 35,000 Buildings and Equipment (net) 180,000 160,000 Investment in Solar Company 112,000 0 Total Assets $ 422,000 $ 250,000 Accounts Payable $ 40,000 $ 40,000 Preferred Stock 30,000 50,000 Common Stock ($15 par value) 90,000 75,000 Retained Earnings 262,000 85,000 Total Liabilities and Owners’ Equity $ 422,000 $ 250,000 Neither of the preferred issues…
Exercise 5-7 (Static) Consolidation with Noncontrolling Interest LO 5-2 Prophet Corporation acquired 75 percent of Seer Corporation’s voting common stock on December 31, 20X4, for $390,000. At the date of combination, Seer reported the following: Assets Liabilities Current Assets $ 220,000 Current Liabilities $ 80,000 Long-Term Assets (net) 420,000 Long-Term Liabilities 200,000 Common Stock 120,000 Retained Earnings 240,000 Total $ 640,000 Total $ 640,000 At December 31, 20X4, the book values of Seer's net assets and liabilities approximated their fair values, except for buildings, which had a fair value of $80,000 more than book value, and inventories, which had a fair value of $36,000 more than book value. The fair value of the noncontrolling interest was determined to be $130,000 at that date. Required: Prophet Corporation wishes to prepare a consolidated balance sheet immediately following the business combination. Prepare the consolidation entry or…
QUESTION 43 Prime Company acquired 100 percent of the voting common shares of Standard Video Corporation, its bitter rival, by issuing bonds with a par value and fair value of $150,000. Immediately prior to the acquisition, Prime reported total assets of $500,000, liabilities of $280,000, and stockholders' equity of $220,000. At that date, Standard Video reported total assets of $400,000, liabilities of $250,000, and stockholders' equity of $150,000. Included in Standard's liabilities was an account payable to Prime in the amount of $20,000, which Prime included in its accounts receivable.Based on the preceding information, what amount of stockholders' equity was reported in the consolidated balance sheet immediately after acquisition? $220,000 $370,000 $350,000 $150,000
Question 17 Pain Corporation holds 90 percent of Soothing Company's common shares but none of its preferred shares. On the date of acquisition, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Soothing Company. Summary balance sheets for the companies on December 31, 20X8, are as follows: Pain Corporation Soothing Company Cash and Receivables $ 80,000 $ 70,000 Inventory 40,000 30,000 Buildings and Equipment (net) 160,000 150,000 Investment in Soothing Company 135,000 0 Total Assets $ 415,000 $ 250,000 Accounts Payable 50,000 $ 25,000 Preferred Stock ($10 par value) 50,000 75,000 Common Stock ($5 par value) 100,000 50,000 Retained Earnings 215,000 100,000 Total Liabilities and Owners’ Equity $ 415,000 $ 250,000 Pain's preferred pays a 8 percent annual dividend, and Soothing's…
QUESTION 40 Prime Company acquired 100 percent of the voting common shares of Standard Video Corporation, its bitter rival, by issuing bonds with a par value and fair value of $150,000. Immediately prior to the acquisition, Prime reported total assets of $500,000, liabilities of $280,000, and stockholders' equity of $220,000. At that date, Standard Video reported total assets of $400,000, liabilities of $250,000, and stockholders' equity of $150,000. Included in Standard's liabilities was an account payable to Prime in the amount of $20,000, which Prime included in its accounts receivable.Based on the preceding information, what amount of total assets did Prime report in its separate balance sheet immediately after the acquisition before any consolidation with Standard Video? $900,000 $750,000 $500,000 $650,000
QUESTION 13 On January 1, 20X7, Poke Corporation acquired 25 percent of the outstanding shares of Shove Corporation for $100,000 cash. Shove Company reported net income of $75,000 and paid dividends of $30,000 for both 20X7 and 20X8. The fair value of shares held by Poke was $110,000 and $105,000 on December 31, 20X7 and 20X8 respectively.Based on the preceding information, what amount will be reported by Poke as income from its investment in Shove for 20X8, if it used the equity method of accounting? $11,250 $7,500 $26,250 $18,750
QUESTION 14 On January 1, 20X7, Poke Corporation acquired 25 percent of the outstanding shares of Shove Corporation for $100,000 cash. Shove Company reported net income of $75,000 and paid dividends of $30,000 for both 20X7 and 20X8. The fair value of shares held by Poke was $110,000 and $105,000 on December 31, 20X7 and 20X8 respectively.Based on the preceding information, what amount will be reported by Poke as balance in investment in Shove on December 31, 20X8, if it used the equity method of accounting? $122,500 $100,000 $108,250 $118,750
PROBLEM 31Cobarrubias Corporation had the following investment at FVTPL at the beginning of the current year: Fair ValueABC Corporation, 10,000 shares (originally cost P1,000,000) - P1,200,000JKL Company, 20,000 shares (originally cost P500,000) - 450,000 During the current year, the following transactions occurred: Feb. 28 ABC Corporation declared a 3-for-2 share split. Apr 31 JKL Company declared a 20% share dividend. The market value of JKL Company on this date is P3.00. June 30 Sold 5,000 shares of JKL Company for P100,000, less brokers fee of P1,000. July 31 Sold 5,000 shares of ABC Corporation for P135. Sept 30 Received share rights to purchase one share of ABC Corporation for P100 per share. The company should tender five rights for every share acquired. The market price of ABC Corporation shares on this date is P140. Oct. 31 Exercise all the share rights from ABC…
Question 32 On July 1, 20X8, Pair Logic Corporation acquires 75 percent of Systems Inc. common stock for its underlying book value. At the time of acquisition, the fair value of the noncontrolling interest is equal to its proportionate share of book value of Systems. On January 1, 20X8 Systems reported common stock of $100,000 and retained earnings of $130,000. For the year 20X8, Systems reports the following items: Before Combination (January 1 to June 30) After Combination (July 1 to December 31) Sales $ 150,000 160,000 Cost of Goods Sold 90,000 93,000 Depreciation Expense 20,000 20,000 Other Expenses 15,000 17,000 Net Income 25,000 30,000 Dividends 15,000 18,000 Based on the preceding information, what is the fair value of the noncontrolling interest at the time of acquisition? $47,813 $57,500 $60,000 $45,000
QUESTION 23 On January 3, 20X9, Pleat Company acquired 80 percent of Stitch Corporation's common stock for $344,000 in cash. At the acquisition date, the book values and fair values of Stitch's assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 20 percent of the total book value of Stitch. The stockholders' equity accounts of the two companies at the acquisition date are: Pleat Stitch Common Stock ($5 par value) $ 500,000 $ 200,000 Additional Paid-In Capital 300,000 80,000 Retained Earnings 350,000 150,000 Total Stockholders' Equity $ 1,150,000 $ 430,000 Noncontrolling interest was assigned income of $11,000 in Pleat's consolidated income statement for 20X9.Based on the preceding information, what amount will be assigned to the noncontrolling interest on January 3, 20X9, in the consolidated balance sheet? $50,000 $68,800 $44,000 $86,000

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