Concept explainers
a.
Concept introduction
The consolidated
To prepare: A
a.
Answer to Problem 2.27BP
The journal entry so passed gives a debit of investment and credit the cash with the same amount.
Explanation of Solution
Particular | Debit | Credit |
Cost method entry on books | ||
Investment in S co. | ||
Cash | ||
The initial investment in S co. income | ||
Cash | ||
Investment in the S co. | ||
Record P co. share in S co. dividend | ||
Total |
B.
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.
Answer to Problem 2.27BP
The consolidated worksheet is prepared and discussed.
Explanation of Solution
Book value calculation | |||||
Total book value | = | Common stock | + | Retained earnings | |
Initial book value |
Income statement | P | S | Dr. | Cr. | consolidated |
Sales | |||||
Less Cogs | |||||
Depreciation Exp | |||||
Sel. Exp | |||||
Income from S | |||||
Net income |
Statement of Retain Earning | P | S | Dr. | Cr. | Consolidated |
Opening balance | |||||
Net income | |||||
Less dividend declared | |||||
End balance |
Income statement | P co | S co | Eliminated DR | Eliminated CR | consolidated |
Cash | |||||
Accounts received | |||||
Inventory | |||||
Investment in S co | |||||
Land | |||||
Building and equipment | |||||
Less accumulated depreciation | |||||
Total assets | |||||
Account payable | |||||
Bonds | |||||
Common stocks | |||||
Retained earnings | |||||
Total liabilities |
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Chapter 2 Solutions
ADV.FIN.ACCT. CONNECT+PROCTORIO PLUS
- Peanut 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_forwardAlmond acquires 80% of the share capital of Cashew on 1 August 20X6 and is preparing its group financial statements for the year ended 31 December 20X6. How will Cashew's results be included in the consolidated statement of financial position at 31 December 20X6? a. 80% of Cashew's assets and liabilities, time apportioned for the 4 months from 1 August 20X6 to 31 December 20X6 b. 80% of Cashew's assets and liabilities at 31 December 20X6 C. 100% of Cashew's assets and liabilities at 31 December 20X6 С. d. 100% of Cashew's assets and liabilities, time apportioned for the 4 months from 1 August 20X6 to 31 December 20X6arrow_forwardPeanut Company acquired 90 percent of Snoopy Company's outstanding common stock for $310,500 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $345,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, follow: Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings and Equipment Cost of Goods Sold Depreciation Expense Selling & Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Snoopy Company Total Peanut Company Debit $ 174,000 181,000 211,000 353,700 206,000 707,000 187,000 41,000 220,000 89.000 $2,369,700 Credit $450,000 63,000 188,000 492,000 313,900 789,000 73.800 $2,369,700 Snoopy Company Debit $ 87,000 82,000 76,000 95,000 188,000 120,000 9,000 27,000 34,000 $718,000 Credit $18,000 48,000 69,000 196,000 149,000 238,000 0 $718,000 Required: a. Prepare any equity…arrow_forward
- Peanut Company acquired 90 percent of Snoopy Company's outstanding common stock for $317,700 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $353,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, follow: Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings and Equipment Cost of Goods Sold Depreciation Expense Selling & Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Snoopy Company Total Peanut Company Debit $ 171,000 170,000 220,000 360,000 206,000 717,000 191,000 48,000 210,000 96,000 $ 2,389,000 Credit $ 435,000 60,000 187,000 480,000 360,100 794,000 72,900 $ 2,389,000 Debit Snoopy Company $ 90,000 69,000 89,000 89,000 192,000 105,000 8,000 48,000 34,000 $724,000 Credit $ 16,000 45,000 68,000 181,000 172,000 242,000 0 $724,000 Required: a. Prepare any…arrow_forwardPeanut 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_forward4 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 eguity 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 Credit Debit Credit Debit $ 272,000 $ 77,000 82, 000 Cash Accounts Receivable 200, eee Inventory 193,e00 319,800 216,e00 706,000 118,000 Investment in Snoopy Company Land 81,000 Buildings and Equipment 199, 000 155,000 13,000 54, 250 34,000 Cost of Goods Sold 375,000 Depreciation Expense Selling & Administrative Expense Dividends Declared 47,000 221,000 224,e00 $ 487,000 $ 39,e00 Accumulated Depreciation Accounts Payable Bonds Payable 55,000 39,e00 137,000 79,250 Common Stock Retained Earnings 491,000 682,400 187,e00 158,eee 319, e00 Sales 844,000 Income from Snoopy Company 77,400 Total $2,773,800…arrow_forward
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