Question
Matthews Co. acquired all of the common stock of Jackson Co. on January 1, 2020. As of that date, Jackson had the following trial balance:
Matthews Co. acquired all of the common stock of Jackson Co. on January 1, 2020. As of that date, Jackson had the following trial balance:
Debit | Credit | ||||
Accounts payable | $ | 60,000 | |||
Accounts receivable | $ | 50,000 | |||
Additional paid-in capital | 60,000 | ||||
Buildings (net) (20-year life) | 140,000 | ||||
Cash and short-term investments | 70,000 | ||||
Common stock | 300,000 | ||||
Equipment (net) (8-year life) | 240,000 | ||||
Intangible assets (indefinite life) | 110,000 | ||||
Land | 90,000 | ||||
Long-term liabilities (mature 12/31/22) | 180,000 | ||||
Retained earnings, 1/1/20 | 120,000 | ||||
Supplies | 20,000 | ||||
Totals | $ | 720,000 | $ | 720,000 | |
During 2020, Jackson reported net income of $96,000 while paying dividends of $12,000. During 2021, Jackson reported net income of $132,000 while paying dividends of $36,000. Assume that Matthews Co. acquired the common stock of Jackson Co. for $588,000 in cash. As of January 1, 2020, Jackson's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to an unamortized patent to be amortized over 10 years.
Matthews decided to use the equity method for this investment.
Required:
Using Excel
(A.) Prepare consolidation worksheet entries for December 31, 2020.
(B.) Prepare consolidation worksheet entries for December 31, 2021.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started