Exercise 1

On 12/31/16 Levinson Corp. held no investment securities. On 1/01/17 Levinson purchased 12,000 shares of Whitmore Corp. stock for $50/share and continued to hold the stock until 9/12/19 when it was sold for $56/share (ignore transaction costs). On 8/20/17, and on 8/19/18 Levinson receives a dividend of $2/share on the Whitmore stock. The market value of Whitmore stock was $48/share on 12/31/17 and $51/share on 12/31/18.

Required: Provide all investment related journal entries assuming that Levinson classifies the Whitmore Corp. stock investment as Trading.

Exercise 2 - Consolidation

On 1/01/17 Piper company purchased 100% of the stock of Snake Corp. for $8,000,000. Snake continued to operate as a separate legal corporation after the acquisition. At the time of the acquisition Snake Corp had $4,800,000 of capital stock and $1,600,000 of retained earnings. All assets and liabilities of Snake had fair values equal to their book values at 1/1/17 except for plant assets that were undervalued by $400,000 (fair value=$2,000,000 and its book value=$1,600,000) with a remaining life of 5 years. During 2017, Snake reported net income of $400,000 and declared dividends of $160,000 on 12/31/17. Balance sheets for Piper and Snake at 12/31/17 (in 000s) are as follows:

	Piper	Snake
Cash	1,000	400
Receivables - Net	1,200	2,020
Recevable - Piper		60
Dividends Receivable	160
Inventory	7,400	800
Land	4,800	3,200
Equipment - Net	14,400	1,600
Investment in Snake	8,160
Goodwill
Total Assets	37,120	8,080
Accounts Payable	9,220	1,280
Accts Payable -Snake	60
Dividends Payable	640	160
Capital Stock	24,000	4,800
Retained Earnings	3,200	1,840
Total L + Equity	37,120	8,080

Prepare consolidated balance sheet workpapers for Piper and its subsidiary at 12/31/17. (you can use the excel template provided in a separate document.)