Problem 2: On December 31, 2021, Prompt Corporation has the following information available: Common stock, $10 par Additional paid-in capital Retained earnings Total stockholders' equity $100,000 60,000 40,000 $200.000 On December 31, 2021, Timely Corporation buys an 80% interest in Prompt Corporation for $160,000. On December 31, 2021, the fair value of Prompt's assets and liabilities are equal to the respective book values. Use four decimal places for the ownership percentage. Required: 1.) On January 1, 2022, Prompt Corporation sells 2,000 additional shares of common stock to noncontrolling stockholders at $20 per share. Prepare the journal entry for Timely Corporation on January 1, 2022. 2.) On January 1, 2022 Prompt Corporation sells 2,000 additional shares of common stock to noncontrolling stockholders at $35 per share. Prepare the journal entry for Timely Corporation on January 1, 2022. 3.) On January 1, 2022, Prompt Corporation sells 2,000 additional shares of common stock to noncontrolling stockholders at $15 per share. Prepare the journal entry for Timely Corporation on January 1, 2022.
Problem 2: On December 31, 2021, Prompt Corporation has the following information available: Common stock, $10 par Additional paid-in capital Retained earnings Total stockholders' equity $100,000 60,000 40,000 $200.000 On December 31, 2021, Timely Corporation buys an 80% interest in Prompt Corporation for $160,000. On December 31, 2021, the fair value of Prompt's assets and liabilities are equal to the respective book values. Use four decimal places for the ownership percentage. Required: 1.) On January 1, 2022, Prompt Corporation sells 2,000 additional shares of common stock to noncontrolling stockholders at $20 per share. Prepare the journal entry for Timely Corporation on January 1, 2022. 2.) On January 1, 2022 Prompt Corporation sells 2,000 additional shares of common stock to noncontrolling stockholders at $35 per share. Prepare the journal entry for Timely Corporation on January 1, 2022. 3.) On January 1, 2022, Prompt Corporation sells 2,000 additional shares of common stock to noncontrolling stockholders at $15 per share. Prepare the journal entry for Timely Corporation on January 1, 2022.
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 35P
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Transcribed Image Text:Problem 2:
On December 31, 2021, Prompt Corporation has the following information available:
$100,000
Common stock, $10 par
Additional paid-in capital
Retained earnings
60,000
40,000
Total stockholders' equity
$200.000
On December 31, 2021, Timely Corporation buys an 80% interest in Prompt Corporation for
$160,000. On December 31, 2021, the fair value of Prompt's assets and liabilities are equal to the
respective book values. Use four decimal places for the ownership percentage.
Required:
1.) On January 1, 2022, Prompt Corporation sells 2,000 additional shares of common stock to
noncontrolling stockholders at $20 per share. Prepare the journal entry for Timely
Corporation on January 1, 2022.
2.) On January 1, 2022 Prompt Corporation sells 2,000 additional shares of common stock to
noncontrolling stockholders at $35 per share. Prepare the journal entry for Timely
Corporation on January 1, 2022.
3.) On January 1, 2022, Prompt Corporation sells 2,000 additional shares of common stock to
noncontrolling stockholders at $15 per share. Prepare the journal entry for Timely
Corporation on January 1, 2022.
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