Paper Company acquired 100 percent of Scissor Company's outstanding common stock for $370,000 on January 1, 20X8, when the book value of Scissor's net assets was equal to $370,000. Accumulated depreciation on this date was $24,000. Paper uses the equity method to account for investments. The following trial balance summarizes the financial position and operations for Paper and Scissor as of December 31, 20X9: Scissor Company Debit Credit $116,000 97,000 115,000 Cash Accounts Receivable Inventory Investment in Scissor Company Land Buildings & Equipment Cost of Goods Sold Depreciation Expense Selling & Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Scissor Company Total Paper Company Debit Credit 232,000 165,000 193,000 515,000 250,000 875,000 278,000 65,000 312,000 90,000 $ 630,000 85,000 150,000 625,000 498,000 880,000 107,000 $ 2,975,000 $2,975,000 125,000 250,000 178,000 12,000 58,000 30,000 $ 48,000 40,000 100,000 250,000 188,000 355,000 $981,000 $981,000 (Assume the company prepares the optional Accumulated Depreciation Elimination Entry.) Required: a. Prepare any equity method journal entry(ies) related to the investment in Scissor Company during 20X9. (If no entry is required for a transaction/event. select "No journal entry required" in the first account field.) a. Prepare any equity method journal entry(ies) related to the investment in Scissor Company during 20X9. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record Paper Co.'s 100% share of Scissor Co.'s 20X9 income. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal a. Prepare any equity method journal entry(ies) related to the investment in Scissor Company during 20X9. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet b. Prepare a consolidation worksheet for 20X9. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) PAPER COMPANY AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X9 Consolidation Entries Paper Co. Scissor Co. DR CR Consolidated Income Statement Sales Less: Cost of goods sold Less: Depreciation expense Less: Selling & Administrative expense Income from Scissor Co. Net income 0 $ 0 $ 0 $ Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance $ 0 $ 0 $ 0 $ 0 $ Balance Sheet Assets Cash Accounts receivable Inventory Investment in Scissor Co. Land $ 0 $ 0 $ 0 $ 0 $ Buildings & Equipment Less: Accumulated depreciation Total Assets Liabilities & Equity Accounts payable Bonds payable Common stock Retained earnings Total Liabilities & Equity 0 $ 0 0 $ 0 $
