Use the data from Exercise 8- 1, but assume use of either the complete or the partial equity method rather than the cost method.

Required:
A. Prepare the journal entries Peck Company will make on its books during 2023 and 2024 to account for its investment in Sanno Company.
B. Prepare workpaper eliminating entries necessary to prepare a consolidated statements workpaper on December 31, 2024.

Data from exercise 1

Peck Company purchased Sanno Company common stock in a series of open- market cash purchases from 2022 through 2024 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

Dividends in the amount of $50,000 were distributed by Sanno Company only in 2024. 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. Investments with ownership less than 20% are classified as available for sale securities.

Transcribed Image Text:

Date January 1, 2022 January 1, 2024 Shares Acquired 1,800 (10%) 9,900 (55%) Cost $ 45,000 ($25 per share) 262,350 ($26.5 per share)