Peck Company purchased Sanno Company common stock in a series of open-market cash purchases from 2009 through

Question:

Peck Company purchased Sanno Company common stock in a series of open-market cash purchases from 2009 through 2011 as follows:

Sanno Company had 18,000 shares of $20 par value common stock outstanding during the entire period. Retained earnings balances for Sanno Company on relevant dates were
January 1, 2009.........$ 20,000
January 1, 2010.........(30,000)
January 1, 2011.........85,000
December 31, 2011......170,000
Dividends in the amount of $50,000 were distributed by Sanno Company only in 2011. Any difference between implied and book values is assigned to goodwill. Peck Company uses the cost method to account for its investment in Sanno Company.

Required:
A. Prepare the journal entries that Peck Company would record on its books during 2011 to account for its investment in Sanno Company.
B. Prepare the workpaper eliminating entries necessary to prepare a consolidated statements workpaper on December 31,2011.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...