Peanut Company acquired 90 percent of Snoopy Companys outstanding common stock for $315,000 on January 1, 20X8, when the book value of Snoopys net assets was equal to $350,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of January 1, 20X8, follow:
| | Peanut Company | Snoopy Company |
| Assets | | | | | | | | | | |
| Cash | | $ | 58,000 | | | | $ | 24,000 | | |
| Accounts Receivable | | | 53,000 | | | | | 34,000 | | |
| Inventory | | | 119,000 | | | | | 72,000 | | |
| Investment in Snoopy Company | | | 315,000 | | | | | | | |
| Land | | | 228,000 | | | | | 105,000 | | |
| Buildings and Equipment | | | 713,000 | | | | | 205,000 | | |
| Accumulated Depreciation | | | (385,000 | ) | | | | (6,000 | ) | |
| Total Assets | | $ | 1,101,000 | | | | $ | 434,000 | | |
| Liabilities and Stockholders Equity | | | | | | | | | | |
| Accounts Payable | | $ | 61,000 | | | | $ | 23,000 | | |
| Bonds Payable | | | 191,000 | | | | | 61,000 | | |
| Common Stock | | | 489,000 | | | | | 191,000 | | |
| Retained Earnings | | | 360,000 | | | | | 159,000 | | |
| Total Liabilities and Equity | | $ | 1,101,000 | | | | $ | 434,000 | | |
| |
Required: a. Prepare the journal entry on Peanut's books for the acquisition of Snoopy on January 1, 20X8. (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 the initial investment in Snoopy Co. Note: Enter debits before credits. Date General Journal Debit Credit January 1, Investment in Snoopy Co. Cash b. Prepare a consolidation worksheet on the acquisition date, January 1, 20X8. (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.) PEANUT COMPANY AND SUBSIDIARY Consolidation Entries Peanut Co. Snoopy Co. DR CR Consolidated Balance Sheet Assets Cash Accounts receivable Inventory Investment in Snoopy Co. Land $ $ 0 $ 0 $ 0 $ 0 0 Buildings and equipment Accumulated depreciation Total Assets Liabilities & Stockholders' Equity Accounts payable Bonds payable Common stock Retained earnings NCI in NA of Snoopy Co. Total Liabilities & Stockholders' Equity $ 0 $ 0 $ 0 $ 0 $ 0 c. Prepare a consolidated balance sheet on the acquisition date, January 1, 20X8. (Amounts to be deducted should be indicated by a minus sign.) Consolidated Balance Sheet 1/1/20X8 Assets Cash Accounts receivable Inventory Land Buildings and equipment Accumulated depreciation $ 0 Total Assets Liabilities & Equity Accounts payable Bonds payable Common stock Retained earnings NCI in NA of Snoopy Co. Total Liabilities & Equity $ 0 Required: a. Prepare the journal entry on Peanut's books for the acquisition of Snoopy on January 1, 20X8. (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 the initial investment in Snoopy Co. Note: Enter debits before credits. Date General Journal Debit Credit January 1, Investment in Snoopy Co. Cash b. Prepare a consolidation worksheet on the acquisition date, January 1, 20X8. (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.) PEANUT COMPANY AND SUBSIDIARY Consolidation Entries Peanut Co. Snoopy Co. DR CR Consolidated Balance Sheet Assets Cash Accounts receivable Inventory Investment in Snoopy Co. Land $ $ 0 $ 0 $ 0 $ 0 0 Buildings and equipment Accumulated depreciation Total Assets Liabilities & Stockholders' Equity Accounts payable Bonds payable Common stock Retained earnings NCI in NA of Snoopy Co. Total Liabilities & Stockholders' Equity $ 0 $ 0 $ 0 $ 0 $ 0 c. Prepare a consolidated balance sheet on the acquisition date, January 1, 20X8. (Amounts to be deducted should be indicated by a minus sign.) Consolidated Balance Sheet 1/1/20X8 Assets Cash Accounts receivable Inventory Land Buildings and equipment Accumulated depreciation $ 0 Total Assets Liabilities & Equity Accounts payable Bonds payable Common stock Retained earnings NCI in NA of Snoopy Co. Total Liabilities & Equity $ 0
