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On December 31, 20X8, Paragraph Corporation acquired 80 percent of Sentence Companys common stock for $136,000. At the acquisition date, the book values and fair
On December 31, 20X8, Paragraph Corporation acquired 80 percent of Sentence Companys common stock for $136,000. At the acquisition date, the book values and fair values of all of Sentences assets and liabilities were equal. Paragraph uses the equity method in accounting for its investment. Balance sheet information provided by the companies at December 31, 20X8, immediately following the acquisition is as follows:
Paragraph Corporation | Sentence Company | |||||||
Cash | $ | 74,000 | $ | 20,000 | ||||
Accounts Receivable | 120,000 | 70,000 | ||||||
Inventory | 180,000 | 90,000 | ||||||
Fixed Assets (net) | 350,000 | 240,000 | ||||||
Investment in Sentence Co. | 136,000 | |||||||
Total Debits | $ | 860,000 | $ | 420,000 | ||||
Accounts Payable | $ | 65,000 | $ | 30,000 | ||||
Notes Payable | 350,000 | 220,000 | ||||||
Common Stock | 150,000 | 90,000 | ||||||
Retained Earnings | 295,000 | 80,000 | ||||||
Total Credits | $ | 860,000 | $ | 420,000 | ||||
Required: Prepare a consolidated balance sheet for Paragraph at December 31, 20X8.
PARAGRAPH CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X8 Assets $ 0 Total Assets Liabilities and Stockholders' Equity Total Liabilities and Stockholders' Equity S 0Step by Step Solution
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