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Peanut Company acquired 100 percent of Snoopy Company's outstanding common stock for $300,000 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $300,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, are as follows: Cash Accounts Receivable Inventory Investment in Snoopy 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 Snoopy Company Total Peanut Company Debit Credit $ 130,000 165,000 200,000 355,000 200,000 700,000 200,000 50,000 225,000 100,000 $ 450,000 75,000 200,000 500,000 225,000 800,000 75,000 $2,325,000 $2,325,000 Snoopy Company Debit Credit $ 80,000 65,000 75,000 0 100,000 200,000 125,000 10,000 40,000 20,000 $ 20,000 60,000 85,000 200,000 100,000 250,000 $715,000 $715,000 (Assume the company prepares the optional Accumulated Depreciation Elimination Entry) Required: a. Prepare the journal entries on Peanut's books for the acquisition of Snoopy on January 1, 20X8, as well as any normal equity method entry(ies) related to the investment in Snoopy Company during 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list X A Record the initial investment in Snoopy Company. > B Record Peanut Co.'s 100% share of Snoopy Co.'s 20X8 income. C Record Peanut Co.'s 100% share of Snoopy Co.'s 20X8 dividend. Credit Note : = journal entry has been entered Record entry Clear entry View general journal b. Prepare a consolidation worksheet for 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 deblt entries Into one amount and enter this amount In the debt column of the worksheet. Slmllarly, combine all credit entries Into one amount and enter this amount In the credit column of the worksheet.) PEANUT COMPANY AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20x8 Consolidation Entries Peanut Co. Snoopy Co. DR CR Consolidated Income Statement Sales Less: Cost of goods sold Less: Depreciation expense Less: Selling & Administrative expense Income from Snoopy Co. Net income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Assets Cash Accounts receivable Inventory Investment in Snoopy Co. Land Buildings & Equipment Less: Accumulated depreciation Total Assets Liabilities & Equity Accounts payable Bonds payable Common stock Retained earnings Total Liabilities & Equity
