Question
ASAPPPPP!!!! AL Company acquired 100 percent of UFUK Companys outstanding common stock for $500,000 on January 1, 2020, when the book value of UFUKs net
ASAPPPPP!!!!
AL Company acquired 100 percent of UFUK Companys outstanding common stock for $500,000 on January 1, 2020, when the book value of UFUKs net assets was equal to $500,000. AL uses the equity method to account for investments. Trial balance data for AL and UFUK as of December 31, 2020, are as follows:
|
| AL | UFUK | ||
| ACCCOUNTS | DEBIT | CREDIT | DEBIT | CREDIT |
| Cash | 150.000 |
| 60.000 |
|
| Accounts Receivable | 200.000 |
| 120.000 |
|
| Notes Receivable | 350.000 |
| 260.000 |
|
| Inventory | 800.000 |
| 420.000 |
|
| Investment In UFUK | 660.000 |
| - |
|
| Land | 1.500.000 |
| 800.000 |
|
| Building&Equipment | 900.000 |
| 640.000 |
|
| Accum. Depreciation |
| 560.000 |
| 320.000 |
| AccountsPayable |
| 130.000 |
| 100.000 |
| Notes Payable |
| 370.000 |
| 280.000 |
| Bonds Payable |
| 480.000 |
| 300.000 |
| Common Stock |
| 2.100.000 |
| 1.000.000 |
| Retained Earnings |
| 340.000 |
| 140.000 |
| Dividends Declared | 100.000 |
| 40.000 |
|
| COGS | 600.000 |
| 250.000 |
|
| Depreciation Expense | 80.000 |
| 25.000 |
|
| Other Expenses | 300.000 |
| 175.000 |
|
| Sales |
| 1.500.000 |
| 650.000 |
Required:
- Prepare the journal entries on ALs books for the acquisition of UFUK on January 1, 2020, as well as any normal equity-method entry(ies) related to the investment in UFUK Company during 2020.
B.Prepare a consolidation worksheet for 2020 in good form.
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