Question

Peanut Company acquired 100 percent of Snoopy Company's outstanding common stock for $307,000 on January 1, 20x8, when the book value of Snoopy's net assets was equal to $307,000. Accumulated depreciation on this date was $13,000. Peanut chooses to carry the investment in Snoopy at cost because the investment will be consolidated. 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 246,000 $ 92,000 Accounts Receivable 202,000 190, 000 99,000 109,000 Inventory Investment in Snoopy Company 307,000 0 215,000 702,000 289,000 70,000 Land 118,000 Buildings Equipment 210,000 144, 000 13,000 Cost of Goods Sold Deprecia Selling & Administrative Expense Еxpense 232,000 66,000 Dividends Declared 239, 000 33,000 Accumulated 505, 000 39,000 Depreciation Accounts Payable 69,000 138,000 485,000 614, 000 848,000 33,000 19,000 81,000 189,000 276,000 280,000 Bonds Payable Common Stock Retained Earnings Sales Dividend Income $2,692,000 $2,692,000 $884,000 SB84,000 Total

Answer 1

Part A

Event	General journal	Debit	Credit
1	Cash	33000
	Investment in Snoopy Inc.		33000
	(To record Peanut Co.'s 100% share of Snoopy Co.'s 20X9 dividend)

Part B

PEANUT COMPANY AND SUBSIDIARY
Consolidate financial statements worksheet
December 31, 20X9
			Consolidation entries
	Peanut co.	Snoopy co.	DR	CR	Consolidated
Income statement
Sales	848000	280000			1128000
Less: cost of gold sold	(289000)	(144000)			(433000)
Less: depreciation expense	(70000)	(13000)			(83000)
Less: selling & administrative expense	(232000)	(66000)			(298000)
Dividend income	33000	0	33000		0
Net income	290000	57000	33000	0	314000
Statement of retained earnings
Beginning balance	614000	276000	276000		614000
Net income	290000	57000	33000	0	314000
Less: dividend declared	(239000)	(33000)		33000	(239000)
Ending balance	665000	300000	309000	33000	689000
Balance sheet
Assets
Cash	246000	92000			338000
Accounts receivables	202000	99000			301000
Inventory	190000	109000			299000
Investment in snoopy co.	307000			307000	0
Land	215000	118000			333000
Buildings & Equipment	702000	210000		13000	899000
Less: accumulated depreciation	(505000)	(39000)	13000		(531000)
Total assets	1357000	589000	13000	320000	1639000
Liabilities & Equity
Accounts payable	69000	19000			88000
Bonds payable	138000	81000			219000
Common stock	485000	189000	189000		485000
Retained earnings	665000	300000	309000	33000	689000
Total liabilities and Equity	1357000	589000	498000	33000	1481000