Loose Leaf For Advanced Financial Accounting
12th Edition
ISBN: 9781260165111
Author: Christensen, Theodore E., COTTRELL, David
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 2, Problem 2.23P
a.
To determine
Introduction:
The consolidated balance sheet and the worksheets are the computed tools that are used to calculate the
To prepare: A
a.
Expert Solution
Explanation of Solution
| Particular | Dr. | Cr. |
| Equity method entry on paper’s co.’s books | ||
| Investment in scissor co. Dr. | ||
| Cash Cr. | ||
| Record initial investment in scissor co. | ||
| Investment in scissor co. Dr. | ||
| Income from scissor co. Cr. | ||
| Cash Dr. | ||
| Investment in S Cr. | ||
| Record paper co. share in scissor co. dividend | ||
| Total |
b.
To determine
Concept introduction
The consolidated balance sheet and the worksheets are the computed tools that are used to calculate the retained earnings and the dividend produced by the subsidiaries towards its parent company.
To prepare: the consolidated worksheet for the final values
b.
Expert Solution
Answer to Problem 2.23P
The consolidated worksheet is prepared and discussed.
Explanation of Solution
| Book value calculation | |||||
| Total book value | = | Common stock | + | Retained earnings | |
| Book value | |||||
| Net income | |||||
| Dividend | |||||
| Ending book value |
| Income statement | P | S | Dr. | Cr. | consolidated |
| Sales | |||||
| Less Cogs | |||||
| Depreciation Exp | |||||
| Sel. Exp | |||||
| Income | |||||
| Net income |
| Statement of Retain Earning | P | S | Dr. | Cr. | Consolidated |
| Opening balance | |||||
| Net income | |||||
| Less dividend declared | |||||
| End balance |
| Income statement | Paper co | Scissor co | Eliminated DR | Eliminated CR | consolidated |
| Cash | |||||
| Accounts received | |||||
| Inventory | |||||
| Investment in scissor co | |||||
| Land | |||||
| Building and equipment | |||||
| Less accumulated depreciation | |||||
| Total assets | |||||
| Account payable | |||||
| Bonds | |||||
| Common stocks | |||||
| Retained earnings | |||||
| Total liabilities |
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
On January 1, 20X5, Peery Company acquired 100 percent of Standard Company's common shares at underlying book value. Peery uses the equity method in accounting for its ownership of Standard. On December 31, 20X5, the trial balances of the two companies are as follows:
Item
Peery Company
Standard Company
Debit
Credit
Debit
Credit
Current Assets
$ 238,000
$ 95,000
Depreciable Assets
300,000
170,000
Investment in Standard Company
100,000
Other Expenses
90,000
70,000
Depreciation Expense
30,000
17,000
Dividends Declared
32,000
10,000
Accumulated Depreciation
$ 120,000
$ 85,000
Current Liabilities
50,000
30,000
Long-Term Debt
120,000
50,000
Common Stock
100,000
50,000
Retained Earnings
175,000
35,000
Sales
200,000
112,000
Income from Standard Company
25,000
$ 790,000
$ 790,000
$ 362,000
$ 362,000
Required:
Prepare the consolidation entries needed as of December 31, 20X5, to complete a…
Paper Company acquired 80 percent of Scissor Company’s outstanding common stock for $296,000 on January 1, 20X8, when the book value of Scissor’s net assets was equal to $370,000. Paper uses the equity method to account for investments. Trial balance data for Paper and Scissor as of December 31, 20X8, are as follows:
Paper Company
Scissor Company
Debit
Credit
Debit
Credit
Cash
$ 191,000
$ 46,000
Accounts Receivable
140,000
60,000
Inventory
190,000
120,000
Investment in Scissor Company
350,400
0
Land
250,000
125,000
Buildings and Equipment
875,000
250,000
Cost of Goods Sold
250,000
155,000
Depreciation Expense
65,000
12,000
Selling & Administrative Expense
280,000
50,000
Dividends Declared
80,000
25,000
Accumulated Depreciation
$ 565,000
$ 36,000
Accounts Payable
77,000
27,000
Bonds Payable
250,000
100,000
Common Stock
625,000
250,000
Retained Earnings
280,000
120,000
Sales
800,000…
Paper Company acquired 80 percent of Scissor Company’s outstanding common stock for $296,000 on January 1, 20X8, when the book value of Scissor’s net assets was equal to $370,000. Paper uses the equity method to account for investments. Trial balance data for Paper and Scissor as of December 31, 20X8, are as follows:
Paper Company
Scissor Company
Debit
Credit
Debit
Credit
Cash
$ 191,000
$ 46,000
Accounts Receivable
140,000
60,000
Inventory
190,000
120,000
Investment in Scissor Company
350,400
0
Land
250,000
125,000
Buildings and Equipment
875,000
250,000
Cost of Goods Sold
250,000
155,000
Depreciation Expense
65,000
12,000
Selling & Administrative Expense
280,000
50,000
Dividends Declared
80,000
25,000
Accumulated Depreciation
$ 565,000
$ 36,000
Accounts Payable
77,000
27,000
Bonds Payable
250,000
100,000
Common Stock
625,000
250,000
Retained Earnings
280,000
120,000
Sales
800,000…
Chapter 2 Solutions
Loose Leaf For Advanced Financial Accounting
Ch. 2 - What types of investments in common stock normally...Ch. 2 - Prob. 2.2QCh. 2 - Describe an investor’s treatment of an investment...Ch. 2 - How is the receipt of a dividend recorded under...Ch. 2 - How does carrying securities at fair value...Ch. 2 - Prob. 2.6QCh. 2 - Prob. 2.7QCh. 2 - Prob. 2.8QCh. 2 - Prob. 2.9QCh. 2 - Prob. 2.10Q
Ch. 2 - How are a subsidiary’s dividend declarations...Ch. 2 - Prob. 2.12QCh. 2 - Give a definition of consolidated retained...Ch. 2 - Prob. 2.14QCh. 2 - Prob. 2.15QCh. 2 - Prob. 2.16AQCh. 2 - When is equity method reporting considered...Ch. 2 - How does the fully adjusted equity method differ...Ch. 2 - What is the modified equity method? When might a...Ch. 2 - Choice of Accounting Method Slanted Building...Ch. 2 - Prob. 2.2CCh. 2 - Prob. 2.3CCh. 2 - Prob. 2.4CCh. 2 - Prob. 2.5CCh. 2 - Prob. 2.6CCh. 2 - Prob. 2.1.1ECh. 2 - Multiple-Choice Questions on Accounting for Equity...Ch. 2 - Prob. 2.1.3ECh. 2 - Prob. 2.1.4ECh. 2 - Multiple-Choice Questions on Intercorporate...Ch. 2 - Prob. 2.2.2ECh. 2 - Prob. 2.3.1ECh. 2 - Prob. 2.3.2ECh. 2 - Prob. 2.3.3ECh. 2 - Prob. 2.4ECh. 2 - Acquisition Price Phillips Company bought 40...Ch. 2 - Prob. 2.6ECh. 2 - Prob. 2.7ECh. 2 - Carrying an investment at Fair Value versus Equity...Ch. 2 - Carrying an Investment at Fair Value versus Equity...Ch. 2 - Prob. 2.10ECh. 2 - Prob. 2.11ECh. 2 - Prob. 2.12ECh. 2 - Prob. 2.13ECh. 2 - Income Reporting Grandview Company purchased 40...Ch. 2 - Investee with Preferred Stock Outstanding Reden...Ch. 2 - Prob. 2.16AECh. 2 - Prob. 2.17AECh. 2 - Changes ¡n the Number of Shares Held Idle...Ch. 2 - Investments Carried at Fair Value and Equity...Ch. 2 - Carried at Fair Value Journal Entries Marlow...Ch. 2 - Consolidated Worksheet at End of the First Year of...Ch. 2 - Consolidated Worksheet at End of the Second Year...Ch. 2 - Prob. 2.23PCh. 2 - Prob. 2.24PCh. 2 - Prob. 2.25APCh. 2 - Equity-Method income Statement Wealthy...Ch. 2 - Prob. 2.27BPCh. 2 - Prob. 2.28BP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Peanut Company acquired 80 percent of Snoopy Company’s outstanding common stock for $300,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equal to $375,000. Peanut uses the equity method to account for investments. The following trial balance summarizes the financial position and operations for Peanut and Snoopy as of December 31, 20X9: Peanut Company Snoopy Company Debit Credit Debit Credit Cash $ 269,000 $ 80,000 Accounts Receivable 193,000 85,000 Inventory 196,000 106,000 Investment in Snoopy Company 306,600 0 Land 211,000 85,000 Buildings and Equipment 702,000 194,000 Cost of Goods Sold 375,000 168,000 Depreciation Expense 45,000 20,000 Selling & Administrative Expense 214,000 25,750 Dividends Declared 221,000 49,000 Accumulated Depreciation $ 495,000 $ 60,000 Accounts Payable 66,000 60,000 Bonds Payable 137,000 46,750 Common Stock 496,000 195,000 Retained Earnings 631,800 145,000 Sales 833,000 306,000 Income from Snoopy Company 73,800 0 Total $ 2,732,600…arrow_forwardPeanut Company acquired 100 percent of Snoopy Company’s outstanding common stock for $300,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equal to $300,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, are as follows: Peanut Company Snoopy Company Debit Credit Debit Credit Cash $ 130,000 $ 80,000 Accounts Receivable 165,000 65,000 Inventory 200,000 75,000 Investment in Snoopy Company 355,000 0 Land 200,000 100,000 Buildings and Equipment 700,000 200,000 Cost of Goods Sold 200,000 125,000 Depreciation Expense 50,000 10,000 Selling and Administrative Expense 225,000 40,000 Dividends Declared 100,000 20,000 Accumulated Depreciation $ 450,000 $ 20,000 Accounts Payable 75,000 60,000 Bonds Payable 200,000 85,000 Common Stock 500,000 200,000 Retained Earnings 225,000 100,000 Sales 800,000…arrow_forward
Recommended textbooks for you
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning