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8-2 The accounts of Pyle Company and its subsidiary, Stern Company, are summarized below as of December 31, 2014: Debits Pyle Stern Current Assets $605,700

8-2

The accounts of Pyle Company and its subsidiary, Stern Company, are summarized below as of December 31, 2014:

Debits Pyle Stern
Current Assets $605,700 $329,000
Investment in Stern Company 479,000
Other Assets 1,185,000 664,000
Dividends Declared, 11/1 84,000 60,000
$2,353,700 $1,053,000
Credits
Liabilities $187,000 $87,000
Common Stock, $5 par 500,000 300,000
Other Contributed Capital 234,000 180,000
1/1 Retained Earnings 1,194,000 279,000
Net Income 238,700 207,000
$2,353,700 $1,053,000

Pyle Company made the following open-market purchase and sale of Stern Company common stock:

January 2, 2012, purchased 51,000 shares (85% of Stern), cost $510,000, $10/share;
January 1, 2014 sold 40,000 shares (two-thirds of Stern), proceeds, $480,000, $12/share.

The book value of Stern Companys net assets on January 2, 2012, $600,000, approximated the fair value of those net assets, including retained earnings of $121,000. Subsequent changes in book value of the net assets are entirely attributable to earnings of Stern Company. Stern Company earns its income evenly throughout the year.

Prepare the journal entries needed on Pyle Companys books to record the transactions regarding the investment in Stern Company account assuming that the cost method is used to account for the investment.(Round intermediate calculations to 5 decimal places, e.g. 1.24687 and final answers to 0 decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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