Question
Stake Company reported the following summarized balance sheet data as of December 31, 20X2: Cash $ 36,000 Accounts Payable $ 45,000 Accounts Receivable 82,000 Common
Stake Company reported the following summarized balance sheet data as of December 31, 20X2:
Cash | $ | 36,000 | Accounts Payable | $ | 45,000 | |||
Accounts Receivable | 82,000 | Common Stock | 100,000 | |||||
Inventory | 93,000 | Retained Earnings | 222,000 | |||||
Buildings & Equipment | 291,000 | |||||||
Less: Accumulated Depreciation | (135,000 | ) | ||||||
Total Assets | $ | 367,000 | Total Liabilities & Equities | $ | 367,000 | |||
Stake issues 4,400 additional shares of its $10 par value stock to its shareholders as a stock dividend on April 20, 20X3. The market price of Stakes shares at the time of the stock dividend is $60. Stake reports net income of $28,000 and pays a $14,000 cash dividend in 20X3. Pole Company acquired 70 percent of Stakes common shares at book value on January 1, 20X1. At that date, the fair value of the noncontrolling interest was equal to 30 percent of Stakes book value. Pole uses the equity method in accounting for its investment in Stake. Required: a. Prepare the journal entries recorded by Stake and Pole at the time the stock dividend is declared and distributed. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
b. Prepare the worksheet consolidation entries needed to prepare consolidated financial statements for 20X3. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
c. Prepare the worksheet consolidation entry needed to prepare a consolidated balance sheet on January 1, 20X4. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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