During 2020, Peerless Companys whollyowned subsidiary, Safeco Inc reported net income of $1,600,000 and declared and paid dividends of $600,000 Peerless acquired Safeco on January 2, 2020, at a cash cost of $8,000,000, which was $1,000,000 in excess of the book value of net assets acquired Safecos equipment (five year life) was undervalued by $500,000 Its inventory, reported using FIFO, was undervalued by $200,000 The remaining $300,000 could not be allocated to identifiable assets and liabilities Impairment testing indicates that goodwill was impaired by $50,000 during 2020 Safecos beginning inventory was sold during 2020 Required a Prepare the journal entries recorded by Peerless in 2020 to record the acquisition and apply the complete equity method Enter numerical answers using all zeros (do not abbreviate in thousands or in millions) Description Debit Credit AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer To record acquisition of Safeco AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer AnswerCashCost of goods soldCustomers listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer To record equity in net income AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer To record dividends received Prepare the necessary eliminating entries to consolidate the financial statements of Peerless and Safeco at December 31, 2020 Enter numerical answers using all zeros (do not abbreviate in thousands or in millions) Ref Description Debit Credit (C) AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer Investment in Safeco Answer Answer (E) AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer (R) Equipment, net Answer Answer Inventory Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer (O) Depreciation expense Answer Answer Goodwill impairment loss Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer Equipment, net Answer Answer Goodwill Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer b Safeco reported net income of $2,000,000 and declared and paid dividends of $800,000 in 2021 There was no further goodwill impairment Prepare the journal entries recorded by Peerless in 2021 to apply the complete equity method Enter numerical answers using all zeros (do not abbreviate in thousands or in millions) Description Debit Credit AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer To record equity in net income AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer To record dividends received Prepare the necessary eliminating entries to consolidate the financial statements of Peerless and Safeco at December 31, 2021 Enter numerical answers using all zeros (do not abbreviate in thousands or in millions) Ref Description Debit Credit (C) AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer Investment in Safeco Answer Answer (E) AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer (R) Equipment, net Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer (O) AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity Safeco Answer Answer

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During 2020, Peerless Companys whollyowned subsidiary, Safeco Inc. reported net income of $1,600,000 and declared and paid dividends of $600,000. Peerless acquired Safeco on January

During 2020, Peerless Companys whollyowned subsidiary, Safeco Inc. reported net income of $1,600,000 and declared and paid dividends of $600,000. Peerless acquired Safeco on January 2, 2020, at a cash cost of $8,000,000, which was $1,000,000 in excess of the book value of net assets acquired. Safecos equipment (five-year life) was undervalued by $500,000. Its inventory, reported using FIFO, was undervalued by $200,000. The remaining $300,000 could not be allocated to identifiable assets and liabilities. Impairment testing indicates that goodwill was impaired by $50,000 during 2020. Safecos beginning inventory was sold during 2020.

Required

a. Prepare the journal entries recorded by Peerless in 2020 to record the acquisition and apply the complete equity method.

Enter numerical answers using all zeros (do not abbreviate in thousands or in millions).

Description	Debit	Credit
AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
To record acquisition of Safeco.
AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
AnswerCashCost of goods soldCustomers listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
To record equity in net income.
AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
To record dividends received.

Prepare the necessary eliminating entries to consolidate the financial statements of Peerless and Safeco at December 31, 2020.

Enter numerical answers using all zeros (do not abbreviate in thousands or in millions).

Ref.	Description	Debit	Credit
(C)	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
	Investment in Safeco	Answer	Answer
(E)	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
(R)	Equipment, net	Answer	Answer
	Inventory	Answer	Answer
	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
(O)	Depreciation expense	Answer	Answer
	Goodwill impairment loss	Answer	Answer
	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
	Equipment, net	Answer	Answer
	Goodwill	Answer	Answer
	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer

b. Safeco reported net income of $2,000,000 and declared and paid dividends of $800,000 in 2021. There was no further goodwill impairment. Prepare the journal entries recorded by Peerless in 2021 to apply the complete equity method.

Enter numerical answers using all zeros (do not abbreviate in thousands or in millions).

Description	Debit	Credit
AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
To record equity in net income.
AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
To record dividends received.

Prepare the necessary eliminating entries to consolidate the financial statements of Peerless and Safeco at December 31, 2021.

Enter numerical answers using all zeros (do not abbreviate in thousands or in millions).

Ref.	Description	Debit	Credit
(C)	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
	Investment in Safeco	Answer	Answer
(E)	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
(R)	Equipment, net	Answer	Answer
	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
(O)	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer
	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco	Answer	Answer