Question Information:
Submission Format:
Peanut Company acquired 90 percent of Snoopy Company's outstanding common stock for $270,000 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $300,000. Problem 3-27 summarizes the first year of Peanut's ownership of Snoopy. Peanut uses the equity method to account for investments. The following trial balance summarizes the financial position and operations for Peanut and Snoopy as of December 31, 20x9: Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings & Equipment Cost of Goods Sold Depreciation Expense S&A Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Snoopy Company Total Peanut Company Debit Credit $ 255,000 190.000 180,000 364,500 200,000 700,000 270,000 50,000 230,000 225,000 $ 500,000 75,000 150,000 500,000 517.500 850,000 72.000 $2,664,500 $2,664,500 Snoopy Company Debit Credit $ 75,000 80,000 100,000 0 100,000 200,000 150,000 10,000 60,000 30,000 $ 30,000 35,000 85.000 200.000 155.000 300,000 $805,000 $805.000 Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings & Equipment Cost of Goods Sold Depreciation Expense S&A Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Snoopy Company Total Peanut Company Debit Credit $ 255,000 190.000 180,000 364,500 200,000 700,000 270,000 50,000 230,000 225.000 $ 500,000 75,000 150,000 500,000 517,500 850,000 72.000 $2,664,500 $2.664,500 Snoopy Company Debit Credit $ 75,000 80,000 100,000 0 100,000 200,000 150,000 10,000 60,000 30,000 $ 30,000 35.000 85,000 200.000 155,000 300,000 $805,000 $805.000 Book Value Calculations: Peanut Co. NCI - 10% 90% Common Stock Retained Earnings Beginning book value + Net Income - Dividends Ending book value Investment in Income From Snoopy Snoopy Consolidation Entries DR CR Peanut Co. Snoopy Co. Consolidated Income Statement Sales Less: COGS Less: Depreciation Expense Less: Other Expenses Income from Snoopy Co. Consolidated Net Income NCI in Net Income Controlling Interest in Net Income 850,000 (270,000) (50,000) (230,000) 72,000 372,000 300,000 (150,000) (10,000) (60,000) 80,000 372,000 80,000 Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance 517,500 372,000 (225,000) 664,500 155,000 80,000 (30,000) 205,000 75,000 80,000 100,000 Balance Sheet Cash Accounts Receivable Inventory Investment in Snoopy Co. Land Buildings & Equipment Less: Accumulated Depreciation Total Assets 255,000 190,000 180,000 364,500 200,000 700,000 (500,000) 1,389,500 100,000 200,000 (30,000) 525,000 Accounts Payable Bonds Payable Common Stock Retained Earnings NCI in NA of Snoopy Co. Total Liabilities & Equity 75,000 150,000 500,000 664,500 35,000 85,000 200,000 205,000 1,389,500 525,000
