On the date of the business combination of Passman Corporation and Slago Company, the following working paper
Question:
On the date of the business combination of Passman Corporation and Slago Company, the following working paper elimination was prepared (in journal entry format):
PASSMAN CORPORATION AND SUBSIDIARY
Working Paper Eliminatio
January 31, 2018
Common Stock .................................................100,000
Additional Paid-in Capital ................................200,000
Retained Earnings .............................................300,000
Inventories- (first-in, first-out cost) ..................50,000
Plant Assets (net) ...............................................150,000
Goodwill ................................................................40,000
Investment in Slago Company ...........................840,000
Additional Informatio
1. On January 31, 2018, the remaining economic life of Sago's plant assets was 10 years, and Slago includes straight-line depreciation in operating expenses.
2. Goodwill was unimpaired on January 31, 2019.
3. Slago declared and paid a dividend of $20,000 to Passman on January 31,2019.
4. Slago had a net income of $90,000 for the fiscal year ended January 31, 2019.
Instructions:
Prepare journal entries for Passman Corporation to record the operating results of Slago Company for the year ended January 3, 2019, under the equity method of accounting. Omit explanations and disregard income taxes.
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws