Rain Corporation reported the following summarized balance sheet data on December 31, 2021: $743,000 LIABILITIES ASSETS...

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Rain Corporation reported the following summarized balance sheet data on December 31, 2021: $743,000 LIABILITIES ASSETS TOTAL $743,000 COMMON STOCK APIC RETAINED EARNINGS Total $228,000 45,000 186,000 284,000 $743,000 On January 1, 2022, Purple Company acquired 100% of Rain stock for $515,000. At the acquisition date, the book values and fair values of Rain's assets and liabilities were equal. Rain reported net income of $119,000 for 2022 and paid dividends of $38,000. REQUIRED: 1. Prepare the journal entries recorded by Purple on its books on January 1, 2022, and during 2022 if it accounts for its investment in Rain. Purple uses the equity method. 2. Prepare the consolidation entry (Basic Consolidation Entry) required to be recorded on December 31, 2022, to prepare consolidated financial statements. Rain Corporation reported the following summarized balance sheet data on December 31, 2021: $743,000 LIABILITIES ASSETS TOTAL $743,000 COMMON STOCK APIC RETAINED EARNINGS Total $228,000 45,000 186,000 284,000 $743,000 On January 1, 2022, Purple Company acquired 100% of Rain stock for $515,000. At the acquisition date, the book values and fair values of Rain's assets and liabilities were equal. Rain reported net income of $119,000 for 2022 and paid dividends of $38,000. REQUIRED: 1. Prepare the journal entries recorded by Purple on its books on January 1, 2022, and during 2022 if it accounts for its investment in Rain. Purple uses the equity method. 2. Prepare the consolidation entry (Basic Consolidation Entry) required to be recorded on December 31, 2022, to prepare consolidated financial statements.

Answer rating: 100% (QA)

1 Computing the degree of operating leverage Degree of Operating Leverage Contribution Margin Net Operating Income Degree of Operating Leverage 81000 9000 9 1 Increase in net operating income Increase ... View the full answer