Equity Entries with Differential
Ennis Corporation acquired 35 percent of Jackson Corporation’s stock on January 1, 20X8, by issuing 25,000 shares of its $2 par value common stock. Jackson Corporation’s balance sheet immediately before the acquisition contained the following items:
JACKSON CORPORATION Balance Sheet January 1, 20X8 | ||
| Book Value | Fair Value |
Assets |
|
|
Cash and Receivables | $ 40,000 | $ 40,000 |
Inventory (FIFO basis) | 80,000 | 100,000 |
Land | 50,000 | 70,000 |
Buildings and Equipment (net) | 240,000 | 320,000 |
Total Assets | $410,000 | $530,000 |
Liabilities and Equities |
|
|
Accounts Payable | $ 70,000 | $ 70,000 |
Common Stock | 130,000 |
|
Retained Earnings | 210,000 |
|
Total Liabilities and Equities | $410,000 |
|
Shares of Ennis were selling at $8 at the time of the acquisition. On the date of acquisition, the remaining economic life of buildings and equipment held by Jackson was 20 years. The amount of the differential assigned to goodwill is not impaired. For the year 20X8, Jackson reported net income of $70,000 and paid dividends of $10,000.
Required
a. Give the journal entries recorded by Ennis Corporation during 20X8 related to its investment in Jackson Corporation.
b. What balance will Ennis report as its investment in Jackson at December 31, 20X8?
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.