Pearson Company purchased a 100% interest in Sanders Company and a 90% interest in Taylor Company on

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Pearson Company purchased a 100% interest in Sanders Company and a 90% interest in Taylor Company on January 2, 2019, for $800,000 and $1,300,000, respectively. The account balances and fair values of the acquired companies on the acquisition date were as follows:

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Sanders Company?s equipment has a remaining useful life of 10 years. Two-thirds of Taylor Company?s inventory was sold in 2019, and the rest was sold in the following year. In 2019, Sanders Company reported net income of $500,000 and declared dividends of $100,000. Taylor Company?s net income and declared dividends for 2019 were $800,000 and $200,000, respectively.

Required:

A. Prepare in general journal form the entries on the books of Pearson Corporation to account for its investments in 2019.

B. Prepare the elimination entries necessary in the consolidated statements workpaper for the year ended December 31, 2019.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Advanced Accounting

ISBN: 978-1119373209

7th edition

Authors: Debra C. Jeter, Paul K. Chaney

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