On May 1, 2015, Peters Company purchased 80% of the common stock of Smith Company for $50,000.

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On May 1, 2015, Peters Company purchased 80% of the common stock of Smith Company for $50,000. Additional data concerning these two companies for the years 2015 and 2016 are:

On May 1, 2015, Peters Company purchased 80% of the

Any difference between book value and the value implied by the purchase price relates to Smith Company's land. Peters Company uses the cost method to record its investment.
Required:
A. Prepare the work paper entries that would be made on a consolidated statements work paper for the years ended December 31, 2015 and 2016 for Peters Company and its subsidiary, assuming that Smith Company's income is earned evenly throughout the year.
B. Calculate consolidated net income and consolidated retained earnings for 2015 and 2016.

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Advanced Accounting

ISBN: 978-1119119364

6th edition

Authors: Debra Jeter, Paul Chaney

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