On January 1, 2011, Pacelli Company acquired a 90 interest in Swartz Corporation for $720,000 On this date, Swartz Corporation reported common stock of $500,000 and retained earnings of $200,000 Any difference between implied and book value interest acquired is attributable to the under or overvalu...

Part A 20 11 Cash 90000 x 90 81000 Investment in Swartz Corporation 81000 20 12 Cash 40000 x 9 36000 ...

On January 1, 2011, Pacelli Company acquired a 90% interest in Swartz Corporation for $720,000. On this

Question:

On January 1, 2011, Pacelli Company acquired a 90% interest in Swartz for $720,000. On this date, Swartz reported of $500,000 and retained earnings of $200,000. Any difference between implied and book value interest acquired is attributable to the under- or overvaluation of land.
Other information pertaining to Swartz follows:
2011 Net income $65,000
2011 Cash dividends 90,000

2012 Net income 80,000
2012 Cash dividends 40,000

Pacelli Company uses the partial equity method to account for its investment in Swartz Prepare the general journal entries for 2011 and 2012 to record the receipt of the cash dividends.
B. Prepare all determinable workpaper entries that would be made in the preparation of 2011 consolidated statements workpaper.
C. Prepare all determinable workpaper entries that would be made in the preparation of consolidated statements for 2012.
D. How would the entry in part A change if the cost method was used to account for the investment?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...