Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20X1, for $153,000 On that date, the fair value of the noncontrolling interest was $38,250, and Slice reported retained earnings of $48,000 and had $95,000 of common stock outstanding. Pizza has used the equity method in accounting for its investment in Slice. Trial balance data for the two companies on December 31, 20X5, are as follows:

Additional Information

1. On the date of combination, the fair value of Slice's depreciable assets was $48,750 more than book value. The accumulated depreciation on these assets was $10,000 on the acquisition date. The differential assigned to depreciable assets should be written off over the following 10-year period.
2. There was $14,000 of intercorporate receivables and payables at the end of 20X1.

Required:
a. Prepare all journal entries that Pizza recorded during 20X1related to its investment in Slice. 

b. Prepare all consolidation entries needed to prepare consolidated statements for 20X1. 

c. Prepare a three-part worksheet as of December 31, 20X1. 

 

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Item Cash & Receivables Inventory Land Buildings & Equipment Investment in Slice Products Company Cost of Goods Sold Depreciation Expense Inventory Losses Dividends Declared Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Sales Income from slice Products Company $ Pizza Corporation Debit 82,000 278,000 83,000 516,000 187,660 114,000 23,000 13,000 40,000 $ Credit slice Products Company Debit Credit $ 66,000 101,000 83,000 151,000 46,000 13,000 6,000 18,800 204,000 47,000 237,760 298,000 312,000 209,000 28,900 $1,336,660 $1,336,660 $484,800 $484,800 $ 91,000 15,000 84,800 99,000 89,000 106,000 Item Cash & Receivables Inventory Land Buildings & Equipment Investment in Slice Products Company Cost of Goods Sold Depreciation Expense Inventory Losses Dividends Declared Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Sales Income from slice Products Company $ Pizza Corporation Debit 82,000 278,000 83,000 516,000 187,660 114,000 23,000 13,000 40,000 $ Credit slice Products Company Debit Credit $ 66,000 101,000 83,000 151,000 46,000 13,000 6,000 18,800 204,000 47,000 237,760 298,000 312,000 209,000 28,900 $1,336,660 $1,336,660 $484,800 $484,800 $ 91,000 15,000 84,800 99,000 89,000 106,000

Answer rating: 100% (QA)

Answer Part A No Account titles and explanation debit credit 1 Investment in Slice Products Company 32800 Income from Slice Products Company 1060004600013000600080 32800 to record Pizza Corporations 8... View the full answer