Consolidated Worksheet and Balance Sheet on the Acquisition Date (Equity Method)
Peanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for $270,000 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 January 1, 20X8, are as follows:
|
|
|
| Peanut Company | Snoopy Company |
Assets |
|
|
Cash | 55,000 | 20,000 |
Accounts Receivable | 50,000 | 30,000 |
Inventory | 100,000 | 60,000 |
Investment in Snoopy Stock | 270,000 |
|
Land | 225,000 | 100,000 |
Buildings and Equipment | 700,000 | 200,000 |
Accumulated Depreciation | (400,000) | (10,000) |
Total Assets | 1,000,000 | 400,000 |
Liabilities and Stockholders’ Equity |
|
|
Accounts Payable | 75,000 | 25,000 |
Bonds Payable | 200,000 | 75,000 |
Common Stock | 500,000 | 200,000 |
Retained Earnings | 225,000 | 100,000 |
Total Liabilities and Equity | 1,000,000 | 400,000 |
Required
a. Prepare the journal entry on Peanut’s books for the acquisition of Snoopy on January 1, 20X8.
b. Prepare a consolidation worksheet on the acquisition date, January 1, 20X8, in good form.
c. Prepare a consolidated balance sheet on the acquisition date, January 1, 20X8, in good form.
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