On January 1, 2020, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing,...

  

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On January 1, 2020, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc.. for a total of $1,080,000 In cash and other consideration. At the acquisition date, Smashing had common stock of $780,000, retained earnings of $330,000. and a noncontrolling Interest fair value of $270,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its Investment in Smashing. During the next two years, Smashing reported the following: Net Income 2828 $230,000 2021 210,000 Inventory Dividends Purchases from Declared $43,000 53,000 Corgan $180,000 200,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 40 percent of the current year purchases remain in Smashing's Inventory. a. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. b. Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. Investment balance 12/31/21 $ 1,308,000 Required A Required B Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Accounts No 1 2 3 4 5 6 7 8 Transaction 1 2 3 4 5 co 6 7 8 Investment in Smashing Cost of goods sold Common stock - Smashing Retained earnings - Smashing Investment in Smashing Noncontrolling interest Covenants Investment in Smashing Noncontrolling interest Equity in earnings of Smashing Investment in Smashing Investment in Smashing Dividends declared Amortization expense Covenants Sales Cost of goods sold Cost of goods sold Inventory 33 3333 303 ✔ ♥ 33 33 ›› ›› 33 Debit 27,000 780,000 228,000✔ 155,400 42,400 12,000 → 200,000✔ 30,000 → Credit 27,000 182,400✔ 45,600✔ 155,400 42,400 Ⓒ 12,000 200,000✔ 30,000 On January 1, 2020, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc.. for a total of $1,080,000 In cash and other consideration. At the acquisition date, Smashing had common stock of $780,000, retained earnings of $330,000. and a noncontrolling Interest fair value of $270,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its Investment in Smashing. During the next two years, Smashing reported the following: Net Income 2828 $230,000 2021 210,000 Inventory Dividends Purchases from Declared $43,000 53,000 Corgan $180,000 200,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 40 percent of the current year purchases remain in Smashing's Inventory. a. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. b. Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. Investment balance 12/31/21 $ 1,308,000 Required A Required B Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Accounts No 1 2 3 4 5 6 7 8 Transaction 1 2 3 4 5 co 6 7 8 Investment in Smashing Cost of goods sold Common stock - Smashing Retained earnings - Smashing Investment in Smashing Noncontrolling interest Covenants Investment in Smashing Noncontrolling interest Equity in earnings of Smashing Investment in Smashing Investment in Smashing Dividends declared Amortization expense Covenants Sales Cost of goods sold Cost of goods sold Inventory 33 3333 303 ✔ ♥ 33 33 ›› ›› 33 Debit 27,000 780,000 228,000✔ 155,400 42,400 12,000 → 200,000✔ 30,000 → Credit 27,000 182,400✔ 45,600✔ 155,400 42,400 Ⓒ 12,000 200,000✔ 30,000

Answer rating: 100% (QA)

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