Prime Corporation acquired 100 percent ownership of Steak Products Company on January 1, 20X1, for $295,000....

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Prime Corporation acquired 100 percent ownership of Steak Products Company on January 1, 20X1, for $295,000. On that date, Steak reported retained earnings of $88,000 and had $119,000 of common stock outstanding. Prime has used the equity-method in accounting for its investment in Steak. The trial balances for the two companies on December 31, 20X5, appear below: Item Cash and Receivables Inventory Land Buildings and Equipment Investment in Steak Products Cost of Goods Sold Depreciation Expense Inventory Losses Dividends Declared Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings $ 62,000 279,000 99,000 519,000 Prime Corporation Debit Credit Steak Products Company Debit Credit $ 84,000 109,000 99,000 169,000 295,800 139,000 44,000 34,000 49,000 69,000 34,000 20,200 29,000 $ 224,000 79,000 $ 143,000 39,000 238,000 27,200 319,000 119,000 397,800 109,000 Sales 219,000 176,000 Income from Steak Products 44,000 $ 1,520,800 $ 1,520,800 $ 613,200 $ 613,200 Additional Information: 1. On the date of combination (five years ago), the fair value of Steak's depreciable assets was $88,000 more than the book value. Accumulated depreciation at that date was $10,000. The differential assigned to depreciable assets should be written off over the following 10-year period. 2. There was $29,000 of intercorporate receivables and payables at the end of 20X5. Required: a. Prepare all journal entries that Prime recorded during 20X5 related to its investment in Steak. b. Prepare all consolidating entries needed to prepare consolidated statements for 20X5. c. Prepare a three-part worksheet as of December 31, 20X5. Prime Corporation acquired 100 percent ownership of Steak Products Company on January 1, 20X1, for $295,000. On that date, Steak reported retained earnings of $88,000 and had $119,000 of common stock outstanding. Prime has used the equity-method in accounting for its investment in Steak. The trial balances for the two companies on December 31, 20X5, appear below: Item Cash and Receivables Inventory Land Buildings and Equipment Investment in Steak Products Cost of Goods Sold Depreciation Expense Inventory Losses Dividends Declared Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings $ 62,000 279,000 99,000 519,000 Prime Corporation Debit Credit Steak Products Company Debit Credit $ 84,000 109,000 99,000 169,000 295,800 139,000 44,000 34,000 49,000 69,000 34,000 20,200 29,000 $ 224,000 79,000 $ 143,000 39,000 238,000 27,200 319,000 119,000 397,800 109,000 Sales 219,000 176,000 Income from Steak Products 44,000 $ 1,520,800 $ 1,520,800 $ 613,200 $ 613,200 Additional Information: 1. On the date of combination (five years ago), the fair value of Steak's depreciable assets was $88,000 more than the book value. Accumulated depreciation at that date was $10,000. The differential assigned to depreciable assets should be written off over the following 10-year period. 2. There was $29,000 of intercorporate receivables and payables at the end of 20X5. Required: a. Prepare all journal entries that Prime recorded during 20X5 related to its investment in Steak. b. Prepare all consolidating entries needed to prepare consolidated statements for 20X5. c. Prepare a three-part worksheet as of December 31, 20X5.

Answer rating: 100% (QA)

a Journal entries recorded by Prime Corporation during 20X5 related to its investment in Steak 1 To record equity in income of Steak Products Company ... View the full answer