Prince Corporation acquired 1O0 percent of Sword Company on January 1, 20X7, for $178,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Sword Company Prince Corporation Credit Debit Credit Debit $ 34,000 66,000 118,000 29,000 157,000 Item Cash Accounts Receivable Inventory Land Buildings and Equipment Investment in Sword Company Cost of Goods Sold Depreciation Expense other Expenses 93,000 61,000 175,000 91,000 494,000 228,000 494,000 23,000 60,000 69,000 2$ 255,000 13,000 60,000 21,000 Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Common Stock Retained Earnings Sales Income from Sword Company $ 151,000 59,000 181,000 294,000 342,000 690,000 71,000 $1,788,000 $ 65,000 33,000 129,000 42,000 82,000 402,000 $1,788,000 $753,000 $753,000
Prince Corporation acquired 1O0 percent of Sword Company on January 1, 20X7, for $178,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Sword Company Prince Corporation Credit Debit Credit Debit $ 34,000 66,000 118,000 29,000 157,000 Item Cash Accounts Receivable Inventory Land Buildings and Equipment Investment in Sword Company Cost of Goods Sold Depreciation Expense other Expenses 93,000 61,000 175,000 91,000 494,000 228,000 494,000 23,000 60,000 69,000 2$ 255,000 13,000 60,000 21,000 Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Common Stock Retained Earnings Sales Income from Sword Company $ 151,000 59,000 181,000 294,000 342,000 690,000 71,000 $1,788,000 $ 65,000 33,000 129,000 42,000 82,000 402,000 $1,788,000 $753,000 $753,000
Chapter6: Corporations: Redemptions And Liquidations
Section: Chapter Questions
Problem 63P
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Question
Transcribed Image Text:1. On January 1, 20X7, Sword reported net assets with a book value of $124,000. 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 $28,000 on December 31, 20X7.
Required:
a. Prepare all journal entries recorded by Prince with regard to its investment in Sword during 2OX7. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field.)
Transcribed Image Text:Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $178,000. The trial balances for the two
companies on December 31, 20X7, included the following amounts:
Prince Corporation
Sword Company
Item
Debit
Credit
Debit
Credit
$ 34,000
66,000
118,000
29,000
157,000
Cash
$
93,000
61,000
175,000
91,000
494,000
228,000
494,000
23,000
60,000
69,000
Accounts Receivable
Inventory
Land
Buildings and Equipment
Investment in Sword Company
Cost of Goods Sold
Depreciation Expense
other Expenses
Dividends Declared
255,000
13,000
60,000
21,000
$ 151,000
59,000
181,000
294,000
342,000
690,000
71,000
$ 65,000
Accumulated Depreciation
Accounts Payable
Mortgages Payable
Common Stock
Retained Earnings
33,000
129,000
42,000
82,000
402,000
Sales
Income from Sword Company
$1,788,000
$1,788,000
$753,000
$753,000
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