Question
The December 31, 2012, trial balances of Pettie Corporation and its 90%-owned subsidiary Sunco Corporation are as follows: Sunco Pettie Corporation Corporation Cash................................................................................................................................................. 15,000 45,500
The December 31, 2012, trial balances of Pettie Corporation and its 90%-owned subsidiary Sunco Corporation are as follows: Sunco Pettie Corporation Corporation Cash................................................................................................................................................. 15,000 45,500 Accounts and Other Current Receivables...................................................................................... 410,900 170,000 Inventory ........................................................................................................................................ 920,000 739,400 Property, Plant, and Equipment (net)............................................................................................ 1,000,000 400,000 Investment in Sunco Corporation ................................................................................................. 1,260,000 Accounts Payable and Other Current Liabilities ........................................................................... (140,000) (305,900) Common Stock ($10 par) ............................................................................................................... (500,000) Common Stock ($10 par) ............................................................................................................... (200,000) Retained Earnings, January 1, 2012 .............................................................................................. (2,800,000) (650,000) Dividends Declared ........................................................................................................................ 1,000 Sales ............................................................................................................................................... (2,000,000) (650,000) Dividend Income ............................................................................................................................ (900) Interest Expense ............................................................................................................................ 5,000 Interest Income .............................................................................................................................. (5,000) Cost of Goods Sold ......................................................................................................................... 1,500,000 400,000 Other Expenses .............................................................................................................................. 340,000 45,000 Totals .............................................................................................................................................. 0 0 Petties's investment in Sunco was purchased for $1,260,000 in cash on January 1, 2011, and was accounted for by the cost method. On January 1, 2011, Sunco had the following equity balances: Common Stock ........................................ $200,000 Retained earnings ................................... 600,000 Total equity ............................................. $800,000 Pettie's excess of cost over book value on Sunco's investment has been identified as goodwill. Sunco borrowed $100,000 from Pettie on June 30, 2012, with the note maturing on June 30, 2013, at 10% interest. Correct accruals have been recorded by both companies. Can you please do the journal entries for this problem?
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