Eliminating Entries After First and Second Years

During 2023, Peerless Companys wholly- owned subsidiary, Safeco Inc. reported net income of $2,100,000 and declared and paid dividends of $800,000. Peerless acquired Safeco on January 2, 2023, at a cash cost of $10,000,000, which was $6,000,000 in excess of the book value of net assets acquired. Safecos equipment (5-year life) was overvalued by $500,000. Its inventory, reported using FIFO, was overvalued by $200,000. The remaining excess of acquisition cost over book value was attributed to goodwill. Impairment testing indicates that goodwill was impaired by $100,000 during 2023. Safecos date of acquisition inventory was sold during 2023.

Required

a. Prepare the journal entries recorded by Peerless in 2023 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, 2023.

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)	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco		Answer	Answer
	Inventory		Answer	Answer
	Equipment, net		Answer	Answer
	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco		Answer	Answer
(O)	Equipment, net		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
	Depreciation expense		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 $1,600,000 and declared and paid dividends of $800,000 in 2024. There was no further goodwill impairment. Prepare the journal entries recorded by Peerless in 2024 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, 2024.

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)	AnswerCashCost of goods soldCustomer listsDepreciation expenseDividends-SafecoEquipment, netEquity in net income of SafecoGoodwillInventoryInvestment in SafecoStockholders' equity-Safeco		Answer	Answer
	Equipment, net		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