The trial balance data presented in P8–24 can be converted to reflect use of the cost method by inserting the following amounts in place of those presented for Bennett Corporation:

Investment in Stone Container Stock …….   $ 75,000

Retained Earnings……………………..........…….   187,200

Income from Subsidiary………...................……………  0

Dividend Income…………………...............………..   6,000

Stone reported retained earnings of $25,000 on the date Bennett purchased 60 percent of the stock.

In P8–24

Required

a. Prepare the journal entries that would have been recorded on Bennett’s books during 20X4 under the cost method.

b. Prepare all elimination entries needed to complete a consolidation worksheet as of December 31, 20X4, assuming Bennett uses the cost method.

c. Complete a three-part consolidation worksheet as of December 31, 20X4.

Transcribed Image Text:

Bennett Corporation Stone Container Company Debit Credit Debit Credit S 20,000 80,000 110,000 250,000 $61,600 100,000 120,000 340,000 106,212 122,273 20,000 $ 368,600 40,000 Accounts Receivable Other Assets Investment in Stone Container Bonds Investment in Stone Container Stock Interest Expense Other Expenses Dividends Dedared Accounts Payable Bonds Payable Common Stock Retained Earnings 2 18,000 $182,000 10,000 50,000 200,000 $ 80,000 200,000 300,000 210,000 450,000 8,212 30,473 70,000 250,000 Interest Income Income from Stone Container Co Total $1,278,685 $1,278,685 $670,000 $670,000