On January 1, 2020, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 1, 2020, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc.. for a total of $1,080,000 In cash and other consideration. At the acquisition date, Smashing had common stock of $780,000, retained earnings of $330,000. and a noncontrolling Interest fair value of $270,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its Investment in Smashing. During the next two years, Smashing reported the following: Net Income 2828 $230,000 2021 210,000 Inventory Dividends Purchases from Declared $43,000 53,000 Corgan $180,000 200,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 40 percent of the current year purchases remain in Smashing's Inventory. a. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. b. Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. Investment balance 12/31/21 $ 1,308,000 Required A Required B Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Accounts No 1 2 3 4 5 6 7 8 Transaction 1 2 3 4 5 co 6 7 8 Investment in Smashing Cost of goods sold Common stock - Smashing Retained earnings - Smashing Investment in Smashing Noncontrolling interest Covenants Investment in Smashing Noncontrolling interest Equity in earnings of Smashing Investment in Smashing Investment in Smashing Dividends declared Amortization expense Covenants Sales Cost of goods sold Cost of goods sold Inventory 33 3333 303 ✔ ♥ 33 33 ›› ›› 33 Debit 27,000 780,000 228,000✔ 155,400 42,400 12,000 → 200,000✔ 30,000 → Credit 27,000 182,400✔ 45,600✔ 155,400 42,400 Ⓒ 12,000 200,000✔ 30,000 On January 1, 2020, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc.. for a total of $1,080,000 In cash and other consideration. At the acquisition date, Smashing had common stock of $780,000, retained earnings of $330,000. and a noncontrolling Interest fair value of $270,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its Investment in Smashing. During the next two years, Smashing reported the following: Net Income 2828 $230,000 2021 210,000 Inventory Dividends Purchases from Declared $43,000 53,000 Corgan $180,000 200,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 40 percent of the current year purchases remain in Smashing's Inventory. a. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. b. Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. Investment balance 12/31/21 $ 1,308,000 Required A Required B Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Accounts No 1 2 3 4 5 6 7 8 Transaction 1 2 3 4 5 co 6 7 8 Investment in Smashing Cost of goods sold Common stock - Smashing Retained earnings - Smashing Investment in Smashing Noncontrolling interest Covenants Investment in Smashing Noncontrolling interest Equity in earnings of Smashing Investment in Smashing Investment in Smashing Dividends declared Amortization expense Covenants Sales Cost of goods sold Cost of goods sold Inventory 33 3333 303 ✔ ♥ 33 33 ›› ›› 33 Debit 27,000 780,000 228,000✔ 155,400 42,400 12,000 → 200,000✔ 30,000 → Credit 27,000 182,400✔ 45,600✔ 155,400 42,400 Ⓒ 12,000 200,000✔ 30,000
Expert Answer:
Answer rating: 100% (QA)
Calculation of deferred profit 2020 Inventory in stock Profit in above stock Inventory in stock Prof... View the full answer
Related Book For
Introduction to Governmental and Not for Profit Accounting
ISBN: 978-0132776011
7th edition
Authors: Martin Ives, Terry K. Patton, Suesan R. Patton
Posted Date:
Students also viewed these accounting questions
-
Prepare journal entries to record the transactions in E12- 3. In E12- 3. For each of the following transactions, identify the net asset classification ( unrestricted, temporarily restricted,...
-
Prepare journal entries to record the transactions in CP7-1 assuming that a periodic inventory system is used, with inventory costs being determined on a FIFO basis.
-
Prepare journal entries to record the transactions in PA7-1 assuming that a periodic inventory system is used, with inventory costs being determined on a FIFO basis.
-
On July 31, 2014, Amsterdam Company engaged Minsk Tooling Company to construct a special-purpose piece of factory machinery. Construction was begun immediately and was completed on November 1, 2014....
-
Describe the differences in setting premiums using schedule and class rating systems.
-
Find the complex power delivered by vs to the network in Fig. 11.69. Let vs = 100 cos 2000t V. 30 40mF
-
Explain why removing cycles from a search tree is a good idea.
-
Petal Providers Corporation opens and operates mega floral stores in the United States. The idea behind the superstore concept is to model the U.S. floral industry after its European counterparts,...
-
What the legal framework for cryptocurrencies in South Africa is. I need legal questions to help me get information to speak about the legal framework of cryptocurrencies in South Africa. I need all...
-
Anita Vasquez received $190,000 from her mother's estate. She placed the funds into the hands of a broker, who purchased the following securities on Anita's behalf: a. Common stock was purchased at a...
-
Suppose the economy is characterized by the following behavioral equations: C=c0 +c1YD YD = Y T I=b0 +b1 Y Government spending and taxes are constant. Note that investment now increases with output....
-
1. The feed (245 kmol/hr) consists of methanol and water containing 68 moleto methanol and 52 mole % water. The overhead product is to contain 93 mole?. methanol and the bottom product contains 4...
-
1 Two objects are moving towards each other with velocities V and V on a frictionless surface. They collide completely inelastically and move together after the collision with a velocity |V3| = 18,9...
-
A front loader is shown in the figure. The weight of the shovel and the load is 1200 lb. and L = 60 in. 30" 10"- F 12" G E 16" F 10" 20" H 15" 1200 lb 30" 40"- E F 50" L 12" 1- Using Solidworks...
-
What is the magnitude p of the molecule's electric dipole moment? P = C.m The molecule is immersed in a uniform electric field of 2.43105 with its electric dipole vector at an angle of 54.7 from the...
-
The Figure below shows a conveyor belt system. The objective of the system is to move the work piece by a pre-set speed. a) There is a component missing in the figure below, identify this component...
-
Go to at least three of the financial websites listed under: Yahoo! Financial section (http://biz.yahoo.com/ne.html) Google Financial section (http://www.google.com/finance) Morningstar...
-
Should U.S. antidumping laws be stated in terms of average total costs or average variable costs?
-
What is the minimum number of Special Revenue Funds you would expect a local government to have?
-
Define fund as the term is used in governmental accounting.
-
How are the activities of Debt Service Funds controlled?
-
How is biological anthropology today fundamentally different from its origins as physical anthropology?
-
How did the earliest biblical scholars estimate Earths age?
-
How is science different from other ways of understanding the world?
Study smarter with the SolutionInn App