[Based on AICPA] Prepare journal entries to account for investments, and compute noncontro...

[Based on AICPA] Prepare journal entries to account for investments, and compute noncontrolling interest, consolidated retained earnings, and investment balances

On January 1, 2011, Pod Corporation made the following investments:

1. Acquired for cash, 80 percent of the outstanding common stock of Saw Corporation at $140 per share. The stockholders’ equity of Saw on January 1, 2011, consisted of the following:

2. Acquired for cash, 70 percent of the outstanding common stock of Sun Corporation at $80 per share. The stockholders’ equity of Sun on January 1, 2011, consisted of the following:

3. After these investments were made, Pod was able to exercise control over the operations of both companies.

An analysis of the retained earnings of each company for 2011 is as follows:

REQUIRED:

1. What entries should have been made on the books of Pod during 2011 to record the following?

a. Investments in subsidiaries

b. Subsidiary dividends received

c. Parent’s share of subsidiary income or loss

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2. Compute the amount of noncontrolling interest in each subsidiary’s stockholders’ equity at December 31, 2011.

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3. What amount should be reported as consolidated retained earnings of Pod Corporation and subsidiaries as of December 31, 2011?

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4. Compute the correct balances of Pod’s Investment in Saw and Investment in Sun accounts at December 31, 2011, before consolidation.