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Exercise 4-6 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $341,000. On that date, Sales
Exercise 4-6 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $341,000. On that date, Sales Company's stockholders' equity consisted of common stock, $104,900; other contributed capital, $41,100; and retained earnings, $138,000. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2014 Sales Company earned $156,100 and declared and paid a $54,500 dividend. Pert Company used the partial equity method to record its investment in Sales Company. (a) Your answer is correct. Prepare the investment-related entries on Pert Company's books for 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Investment in Subsidiary Cash (To record the investment in Sales Company) Investment in Subsidiary Equity in Subsidiary Inc (To record equity income (loss)) Cash Investment in Subsidia (To record dividend income) Debit 341000 Credit 341000 132685 132685 46325 46325
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