Equity Entries with Goodwill
Turner Corporation reported the following balances at January 1, 20X9:
Item | Book Value | Fair Value |
Cash | $ 45,000 | $ 45,000 |
Accounts Receivable | 60,000 | 60,000 |
Inventory | 120,000 | 130,000 |
Buildings and Equipment | 300,000 | 240,000 |
Less: Accumulated Depreciation | (150,000) |
|
Total Assets | $375,000 | $475,000 |
Accounts Payable | $ 75,000 | $ 75,000 |
Common Stock ($10 par value) | 100,000 |
|
Additional Paid-In Capital | 30,000 |
|
Retained Earnings | 170,000 |
|
Total Liabilities and Equities | $375,000 |
|
On January 1, 20X9, Gross Corporation purchased 100 percent of Turner’s stock. All tangible assets had a remaining economic life of 10 years at January 1, 20X9. Both companies use the FIFO inventory method. Turner reported net income of $16,000 in 20X9 and paid dividends of $3,200. Gross uses the equity-method in accounting for its investment in Turner.
Required
Give all journal entries that Gross recorded during 20X9 with respect to its investment assuming Gross paid $437,500 for the ownership of Turner on January 1, 20X9. The amount of the differential assigned to goodwill is not impaired.
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