Peanut Company acquired 100 percent of Snoopy Company's outstanding common stock for $302,000 on January 1,...

Transcribed Image Text:

Peanut Company acquired 100 percent of Snoopy Company's outstanding common stock for $302,000 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $302,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, are as follows: Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings and Equipment Cost of Goods Sold Depreciation Expense Selling and Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Snoopy Company Total Peanut Company Debit $ 143,000 181,000 205,000 346,000 203,000 700,000 209,000 60,000 229,000 117,000 $ 2,393,000 Credit $ 433,000 64,000 187,000 485,000 363,000 793,000 68,000 $ 2,393,000 Snoopy Company Debit $ 72,000 75,000 87,000 0 85,000 180,000 136,000 16,000 49,000 24,000 $724,000 Credit $32,000 49,000 72,000 216,000 86,000 269,000 0 $ 724,000 (Assume the company prepares the optional Accumulated Depreciation Elimination Entry) Required: a. Prepare the journal entries on Peanut's books for the acquisition of Snoopy on January 1, 20X8, as well as any normal equity method entry(ies) related to the investment in Snoopy Company during 20X8. b. Prepare a consolidation worksheet for 20X8. Peanut Company acquired 100 percent of Snoopy Company's outstanding common stock for $302,000 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $302,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, are as follows: Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings and Equipment Cost of Goods Sold Depreciation Expense Selling and Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Snoopy Company Total Peanut Company Debit $ 143,000 181,000 205,000 346,000 203,000 700,000 209,000 60,000 229,000 117,000 $ 2,393,000 Credit $ 433,000 64,000 187,000 485,000 363,000 793,000 68,000 $ 2,393,000 Snoopy Company Debit $ 72,000 75,000 87,000 0 85,000 180,000 136,000 16,000 49,000 24,000 $724,000 Credit $32,000 49,000 72,000 216,000 86,000 269,000 0 $ 724,000 (Assume the company prepares the optional Accumulated Depreciation Elimination Entry) Required: a. Prepare the journal entries on Peanut's books for the acquisition of Snoopy on January 1, 20X8, as well as any normal equity method entry(ies) related to the investment in Snoopy Company during 20X8. b. Prepare a consolidation worksheet for 20X8.

Answer rating: 100% (QA)

SOLUTION a Journal entries for the acquisition of Snoopy on January 1 20X8 as well as any normal equ... View the full answer