On January 2, 2014, Prunce Company acquired 90% of the outstanding common stock of Sun Company for
Question:
On January 2, 2014, Prunce Company acquired 90% of the outstanding common stock of Sun Company for $192,000 cash. Just before the acquisition, the balance sheets of the two companies were as follows:
The fair values of Sun Company's assets and liabilities are equal to their book values with the exception of land.
Required:
A. Prepare a journal entry to record the purchase of Sun Company's common stock?
B. Prepare a consolidated balance sheet at the date of acquisition?
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Prunce Sun Cash Accounts receivable (net) Inventory Plant and equipment (net) Land $260,000 142,000 117,000 386,000 63,000 $968,000 $64,000 23,000 54,000 98,000 32,000 $271,000 Total asset Accounts payable Mortgage payable Common stock, $2 par value Other contributed capital Retained earnings $104,000 72,000 400,000 208,000 184,000 $968,000 $47,000 39,000 70,000 20,000 95,000 $271,000 Total equities
Step by Step Answer:
Part A Investment in Sun Company 192000 Cash 192000 Part B PRUNCE COMPANY AND SUBSIDIARY Consolidate...View the full answer
Related Video
This video is about ways to attempt consolidated balance sheet questions. since the unconsolidated financial statements of parent and subsidiary companies are prepared separately, consolidating the balance sheets of both companies is critical and sometimes becomes complex. the tutorial will guide students on to how questions on attempting questions on consolidated financial statements in an easier yet more effective way.
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