Orange Company acquired 100 percent of Shell Company's voting common stock on January 1, 2019, for $350,000. At that date, the book value and fair values of Shell's assets and liabilities were equal. Shell reported the following summarized balance sheet data: 

Shell reported net income of $55,000 for 2019 and paid dividend of $20,000 

Required: 

a. Give the journal entries recorded by Orange Company during 2019 on its book if Shell accounts for its investment in Shell using equity method. 

b. Prepare the book value calculation table 

c. Give the consolidation entries needed at December 31, 2019, to prepare consolidated financial statements.

Transcribed Image Text:

Assets $750,000 Accounts payable $100,000 Notes payable 300,000 Common stock 180,000 Retained earnings 170,000 Total $750,000 Total $750,000 Assets $750,000 Accounts payable $100,000 Notes payable 300,000 Common stock 180,000 Retained earnings 170,000 Total $750,000 Total $750,000

Answer rating: 100% (QA)

Journal entries in the book of Orange company on aquisition is as follows Date Particulars Debit Cre... View the full answer