Ma4. Question – Changes in Corporation a) Forde Inc. owned a 80% interest in Scott Inc on January 1, 2012, when Scott Inc had the following stockholders' equity: Common stock ($20 par).............................. $360,000 Paid-in capital in excess of par...................... 700,000 Retained earnings.....................................440,000 Total stockholders' equity.......................... $1,500,000 On July 1, 2012, Scott Inc sold 10,000 additional shares to minority shareholders in a public offering for $50 per share. Scott Inc net income for 2012 was $160,000, and the income was earned evenly during the year. Forde Inc. uses the simple equity method to record the investment in Scott Inc. Summary entries are made each December 31 to record the year's activity. Required: Prepare Forde Inc. equity adjustments for 2012 that result from changes in the investment in ScottInc. account. Assume Forde Inc. has $1,000,000 of paid-in capital in excess of par.

Ma4. Question – Changes in Corporation a) Forde Inc. owned a 80% interest in Scott Inc on January 1, 2012, when Scott Inc had the following stockholders' equity: Common stock ($20 par).............................. $360,000 Paid-in capital in excess of par...................... 700,000 Retained earnings.....................................440,000 Total stockholders' equity.......................... $1,500,000 On July 1, 2012, Scott Inc sold 10,000 additional shares to minority shareholders in a public offering for $50 per share. Scott Inc net income for 2012 was $160,000, and the income was earned evenly during the year. Forde Inc. uses the simple equity method to record the investment in Scott Inc. Summary entries are made each December 31 to record the year's activity. Required: Prepare Forde Inc. equity adjustments for 2012 that result from changes in the investment in ScottInc. account. Assume Forde Inc. has $1,000,000 of paid-in capital in excess of par.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 10MCQ

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