Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need help with the journal entries for 2017/2018 more than anything please. Herbert, Inc. acquired all of Rambis Companys outstanding stock on January 1,

I need help with the journal entries for 2017/2018 more than anything please.

Herbert, Inc. acquired all of Rambis Companys outstanding stock on January 1, 2017 for $ 574,000 in cash. Annual excess amortization of $ 12,000 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $ 400,000, and Rambis reported a $ 200,000 balance. Herbert reported internal income of $ 40,000 in 2017 and $ 50,000 in 2018 and paid $ 10,000 in dividends each year. Rambis reported net income of $ 20,000 in 2017 and $ 30,000 in 2018 and paid $ 5,000 in dividends each year.

Assume that Herberts internal income figures above do not include any income from the subsidiary. The parent uses the equity method.

2017 journal entries for Herbert Inc.

To record the acquistion transaction

1/1/17

Investment in Rambis Company

???

Cash

???

To record receipt of dividend

12/31/17

Cash

Investment in Rambis Company

???

To accrue the subsidiary income

12/31/17

Investment in Rambis Company

???

Equity in Subsidiary Earnings

???

To recognize amortization on allocations

12/31/17

Equity in Subsidiary Earnings

Investment in Rambis Company

???

2018 journal entries for Herbert Inc.

To record receipt of dividend

12/31/18

Cash

??????

Investment in Rambis Company

?????

To accrue the subsidiary income

12/31/18

Investment in Rambis Company

??????

Equity in Subsidiary Earnings

??????

To recognize amortization on allocations

12/31/18

Equity in Subsidiary Earnings

?????

Investment in Rambis Company

?????

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Environmental Health And Safety Audits

Authors: Lawrence B. Cahill, Raymond W. Kane

9th Edition

1605907081, 9781605907086

More Books

Students also viewed these Accounting questions

Question

14. Identify the magic flight in The Blues Brothers.

Answered: 1 week ago

Question

What is the major competition for your organization?

Answered: 1 week ago

Question

How accurate is this existing information?

Answered: 1 week ago