Question
10) P Company purchased 90% of the outstanding common stock of S Company on January 1, 2013 . S Companys stockholders equity at various dates
10) P Company purchased 90% of the outstanding common stock of S Company on January 1, 2013 . S Companys stockholders equity at various dates was:
| 1/1/13 | 1/1/17 | 12/31/17 |
Common stock | $400,000 | $400,000 | $400,000 |
Retained earnings | 120,000 | 380,000 | 460,000 |
Total | $520,000 | $780,000 | $860,000 |
The workpaper entry to establish reciprocity under the cost method in the preparation of a consolidated statements workpaper on December 31, 2017 should include a credit to P Companys retained earnings of:
a) $80,000.
b) $234,000.
c) $260,000.
d) $306,000.
Need an explanation on the question, thank you
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