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

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On May 1, 2015, Peters Company purchased 80% of the common stock of Smith Company for $50,400. Additional data concerning these two companies for the years 2015 and 2016 are: 2015 2016 Peters Smith Peters Smith Common stock $107,800 $24,200 $107,800 $24,200 Other contributed capital 36,900 9,600 36,900 9,600 Retained earnings, 1/1 86,300 10,500 138,200 52,400 Net income (loss) 68,400 44,100 40,100 (5,300 ) Cash dividends (11/30) 16,500 2,200 4,500 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. (a) Your Answer Correct Answer Your answer is correct. Prepare the workpaper entries that would be made on a consolidated statements workpaper 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit 1,760 (b) 2015 Dividend Income Dividends Declared-Subsidiary Company (To record dividend income) Common Stock - Subsidiary Company 24,200 Other Contributed Capital-Subsidiary Company 9,600 Retained Earnings-Subsidiary Company 10,500 Difference between Implied and Book Value Subsidiary Income Purchased Investment in Subsidiary Noncontrolling Interest (To eliminate investment in subsidiary and create noncontrolling interest) Land Difference between Implied and Book Value (To eliminate excess of the 14,700 4000 book value of equity acquired.) 2016 Investment in Subsidiary 21760 Retained Earnings-Parent Company (To establish reciprocity) Common Stock-Subsidiary Company 24,200 Other Contributed Capital-Subsidiary Company 9,600 Retained Earnings-Subsidiary Company 52400 Land Investment in Subsidiary Noncontrolling Interest (To eliminate investment in subsidiary and create noncontrolling interest) eTextbook and Media Solution List of Accounts 4000 1,760 50,400 12,600 4000 21760 72,160 18,040 Attempts: 5 of 5 used Calculate controlling interest in consolidated net income and consolidated retained earnings for 2015 and 2016. 2015 2016 Controlling interest in consolidated net income $ $ Consolidated Retained Earnings $ On May 1, 2015, Peters Company purchased 80% of the common stock of Smith Company for $50,400. Additional data concerning these two companies for the years 2015 and 2016 are: 2015 2016 Peters Smith Peters Smith Common stock $107,800 $24,200 $107,800 $24,200 Other contributed capital 36,900 9,600 36,900 9,600 Retained earnings, 1/1 86,300 10,500 138,200 52,400 Net income (loss) 68,400 44,100 40,100 (5,300 ) Cash dividends (11/30) 16,500 2,200 4,500 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. (a) Your Answer Correct Answer Your answer is correct. Prepare the workpaper entries that would be made on a consolidated statements workpaper 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit 1,760 (b) 2015 Dividend Income Dividends Declared-Subsidiary Company (To record dividend income) Common Stock - Subsidiary Company 24,200 Other Contributed Capital-Subsidiary Company 9,600 Retained Earnings-Subsidiary Company 10,500 Difference between Implied and Book Value Subsidiary Income Purchased Investment in Subsidiary Noncontrolling Interest (To eliminate investment in subsidiary and create noncontrolling interest) Land Difference between Implied and Book Value (To eliminate excess of the 14,700 4000 book value of equity acquired.) 2016 Investment in Subsidiary 21760 Retained Earnings-Parent Company (To establish reciprocity) Common Stock-Subsidiary Company 24,200 Other Contributed Capital-Subsidiary Company 9,600 Retained Earnings-Subsidiary Company 52400 Land Investment in Subsidiary Noncontrolling Interest (To eliminate investment in subsidiary and create noncontrolling interest) eTextbook and Media Solution List of Accounts 4000 1,760 50,400 12,600 4000 21760 72,160 18,040 Attempts: 5 of 5 used Calculate controlling interest in consolidated net income and consolidated retained earnings for 2015 and 2016. 2015 2016 Controlling interest in consolidated net income $ $ Consolidated Retained Earnings $