Stake Company reported the following summarized balance sheet data as of December 31, 20X2: Stake issues 4,000

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Stake Company reported the following summarized balance sheet data as of December 31, 20X2:


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Stake issues 4,000 additional shares of its $10 par value stock to its shareholders as a stock dividend on April 20, 20X3. The market price of Stake’s shares at the time of the stock dividend is $40. Stake reports net income of $25,000 and pays a $10,000 cash dividend in 20X3. Pole Company acquired 70 percent of Stake’s 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 Stake’s book value. Pole uses the equity method in accounting for its investment in Stake.



Required


a. Give the journal entries recorded by Stake and Pole at the time the stock dividend is declared and distributed.


b. Give the worksheet consolidation entries needed to prepare consolidated financial statements for 20X3.


c. Give the worksheet consolidation entry needed to prepare a consolidated balance sheet on January 1, 20X4.

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Advanced Financial Accounting

ISBN: 9781260772135

13th Edition

Authors: Theodore Christensen, David Cottrell, Cassy Budd

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