Exercise 4-1 Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2014 for $406,000. At the time of purchase, Song Company's total stockholders' equity amounted to $496,800. Income and dividend distributions for Song Company from 2014 through 2016 are as follows: Net Income (loss) Dividend distribution 2014 2015 2016 $60,600 $53,900 ($57,200 ) 23,800 50,600 36,300 Prepare journal entries on the books of Percy Company from the date of purchase through 2016 to account for its investment in Song Company under each of the following assumptions: Investment in Subsidiary 406000 406000 1 cash (To record the investment in Song Company) Investment in Subsidiary 48480 T 48480 T Equity Income (To record equity income (loss)) Tcash 19040 T 19040 T Investment in Subsidiai (To record amortization) Equity Income T 856|| T Investment in Subsidiai 856 (To record dividend income) Investment in Subsidiary 45760 45760 T Equity Income (To record equity income (loss)) Tcash 40480 40480 T Investment in Subsidiai (To record amortization) cash 45760 T Equity Income (To record equity income (loss)) Tcash 40480 T Investment in Subsidiai 40480 (To record amortization) of cash Investment in Subsidiary (To record dividend income) (To record equity income (loss)) (To record amortization) (To record dividend income) Exercise 4-1 Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2014 for $406,000. At the time of purchase, Song Company's total stockholders' equity amounted to $496,800. Income and dividend distributions for Song Company from 2014 through 2016 are as follows: Net Income (loss) Dividend distribution 2014 2015 2016 $60,600 $53,900 ($57,200 ) 23,800 50,600 36,300 Prepare journal entries on the books of Percy Company from the date of purchase through 2016 to account for its investment in Song Company under each of the following assumptions: Investment in Subsidiary 406000 406000 1 cash (To record the investment in Song Company) Investment in Subsidiary 48480 T 48480 T Equity Income (To record equity income (loss)) Tcash 19040 T 19040 T Investment in Subsidiai (To record amortization) Equity Income T 856|| T Investment in Subsidiai 856 (To record dividend income) Investment in Subsidiary 45760 45760 T Equity Income (To record equity income (loss)) Tcash 40480 40480 T Investment in Subsidiai (To record amortization) cash 45760 T Equity Income (To record equity income (loss)) Tcash 40480 T Investment in Subsidiai 40480 (To record amortization) of cash Investment in Subsidiary (To record dividend income) (To record equity income (loss)) (To record amortization) (To record dividend income)
