Peanut Company acquired 100 percent of Snoopy Companys outstanding common stock for $300,000 on January 1, 20X8,

Peanut Company acquired 100 percent of Snoopy Company’s outstanding common stock for $300,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equal to $300,000.

Problem 2-27 summarizes the first year of Peanut’s ownership of Snoopy.

Problem 2-27

Peanut uses the cost method to account for investments. The following trial balance summarizes the financial position and operations for Peanut and Snoopy as of December 31, 20X9:

Required
a. Prepare any cost method journal entry(ies) related to the investment in Snoopy Company during 20X9.
b. Prepare a consolidation worksheet for 20X9 in goodform.

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Peanut Company Snoopy Company Credit Credit Accounts Receivable Investment in Snoopy Stock Buildings & Equipment 7 5 Cost of Goods Sold Selling & Administrative Expense Dividends Declared Retained Earnings $2,270,000 $2,270,000 $715,000 $715,000 Peanut Company Debit Snoopy Company Debit Credit Credit Cash Accounts Receivable Inventory Investment in Snoopy Stock 230,000 190,000 180,000 300,000 200,000 700,000 270,000 S 75,000 80,000 100,000 Buildings & Equipment Cost of Goods Sold Depreciation Expense Selling & Administrative Expense Dividends Declared Accumulated Depreciation 100,000 200,000 150,000 10,000 60,000 30,000 50,000 230,000 225,000 Bonds Payable Common Stock Retained Earnings Sales Dividend Income 500,000 75,000 150,000 500,000 470,000 850,000 30,000 $ 30,000 35,000 85,000 200,000 155,000 300,000 $2,575,000 $2,575,000 $805,000 805,000