Question
Softball Corporation reported the following balances at January 1, 20X9: Item Book Value Fair Value Cash $ 56,000 $ 56,000 Accounts Receivable 61,000 61,000 Inventory
Softball Corporation reported the following balances at January 1, 20X9:
Item | Book Value | Fair Value |
---|---|---|
Cash | $ 56,000 | $ 56,000 |
Accounts Receivable | 61,000 | 61,000 |
Inventory | 118,000 | 132,000 |
Buildings and Equipment | 301,000 | 241,000 |
Less: Accumulated Depreciation | (165,000) | |
Total Assets | $ 371,000 | $ 490,000 |
Accounts Payable | $ 66,000 | $ 66,000 |
Common Stock ($9 par value) | 98,000 | |
Additional Paid-In Capital | 29,000 | |
Retained Earnings | 178,000 | |
Total Liabilities and Equities | $ 371,000 |
On January 1, 20X9, Pitcher Corporation purchased 100 percent of Softball's stock. All tangible assets had a remaining economic life of 5 years at January 1, 20X9. Both companies use the FIFO inventory method. Softball reported net income of $26,000 in 20X9 and paid dividends of $3,400. Pitcher uses the equity method in accounting for its investment in Softball.
Required:
Prepare all journal entries that Pitcher recorded during 20X9 with respect to its investment assuming Pitcher paid $454,500 for the ownership of Softball on January 1, 20X9. The amount of the differential assigned to goodwill is not impaired.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
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