Exercise $9-6($Static$)$ Subsidiary with Preferred Stock Outstanding LO $9-2$

Playtown Corporation purchased $75$ percent of Sandbox Company common stock and $40$ percent of its preferred stock

on January $1,206,$ for $$270,000$ and $$80,000,$ respectively. At the time of purchase, the fair value of Sandbox's

common shares held by the noncontrolling interest was $$90,000.$ Sandbox's balance sheet contained the following

balances:

For the year ended December $31,20$X$6,$ Sandbox reported net income of $$70,000$ and paid dividends of $$50,000$

$($which includes the preferred dividend$).$ The preferred stock is cumulative and pays an annual dividend of $8$ percent.

Required:

a$.$ Prepare the journal entries recorded by Playtown for its investments in Sandbox during $20$X$6.$

b$.$ Prepare the consolidation entries needed to prepare the consolidated financial statements for Playtown Corporation

as of December $31,206.$

Complete this question by entering your answers in the tabs below.Exercise $9-6($Static$)$ Subsidiary with Preferred Stock Outstanding LO $9-2$

Playtown Corporation purchased $75$ percent of Sandbox Company common stock and $40$ percent of its preferred stock on January $1,20$X$6,$ for $$270,000$ and $$80,000,$ respectively. At the time of purchase, the fair value of Sandbox's common shares held by the noncontrolling interest was $$90,000.$ Sandbox's balance sheet contained the following balances:

Preferred Stock $($$$10$ par value$)$ $ $200,000$

Common Stock $($$$5$ par value$)$ Retained Earnings $150,000210,000$

Total Stockholders' Equity

$ $560,000$

For the year ended December $31,20$X$6,$ Sandbox reported net income of $$70,000$ and paid dividends of $$50,000($which includes the preferred dividend$).$ The preferred stock is cumulative and pays an annual dividend of $8$ percent.

Required:

a$.$ Prepare the journal entries recorded by Playtown for its investments in Sandbox during $20$X$6.$

b$.$ Prepare the consolidation entries needed to prepare the consolidated financial statements for Playtown Corporation as of December $31,20$X$6.$

Complete this question by entering your answers in the tabs below.

Required A Required B

Prepare the journal entries recorded by Playtown for its investments in Sandbox during $20$X$6.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

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