Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $414,000. At that date, the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheet data: Assets $ 713,000 Accounts Payable Bonds Payable Common Stock $ 104,000 195,000 128,000 Retained Earnings 286,000 $ 713,000 Total $ 713,000 Total Round reported net income of $79,000 for 20X2 and paid dividends of $26,000. Required: a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using the equity method. b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements.

Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
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ChapterA2: Investments
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Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $414,000. At that date,
the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheet
data:
Assets
$ 713,000 Accounts Payable
Bonds Payable
$ 104,000
195,000
Common Stock
128,000
Total
$ 713,000
Retained Earnings
Total
286,000
$ 713,000
Round reported net income of $79,000 for 20X2 and paid dividends of $26,000.
Required:
a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using
the equity method.
b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements.
Complete this question by enter
Transcribed Image Text:Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $414,000. At that date, the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheet data: Assets $ 713,000 Accounts Payable Bonds Payable $ 104,000 195,000 Common Stock 128,000 Total $ 713,000 Retained Earnings Total 286,000 $ 713,000 Round reported net income of $79,000 for 20X2 and paid dividends of $26,000. Required: a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using the equity method. b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements. Complete this question by enter
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