Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $195,000. The trial...
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Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $195,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Item Cash Accounts Receivable. Inventory. Land Buildings and Equipment Investment in Sword Company Cost of Goods Sold Depreciation Expense. Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Common Stock Retained Earnings Sales Income from Sword Company Additional Information $ Prince Corporation Debit. 84, 000 56, 000 175,000 82, 000 491, 000 248, 000 491, 000 24,000 72, 000 52, 000 $1,775, 000. Credit. $ 146, 000 57,000 186, 000 287, 000 338, 000 688, 000 73,000 $1,775, 000 Sword Company Debit $ 27,000 61,000 22,000 157, 000 256, 000 14,000 72,000 20,000 $738, 000 Credit $ 70,000 22, 000 86, 000 46, 000 96, 000 418, 000 $738, 000 1. On January 1, 20X7, Sword reported net assets with a book value of $142,000. A total of $20,000 of the acquisition price is applied to goodwill, which was not impaired in 20X7. 2. Sword's depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment. 3. Prince used the equity-method in accounting for its investment in Sword. 4. Detailed analysis of receivables and payables showed that Sword owed Prince $17,000 on December 31, 20X7. Required: a. Prepare all journal entries recorded by Prince with regard to its investment in Sword during 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Income Statement Sales Less: COGS Less: Depreciation expense Less: Other expenses Income from Sword Co. Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Assets Cash Accounts receivable Inventory Land Buildings & equipment Less: Accumulated depreciation Investment in Sword Co. Goodwill Total Assets Liabilities & Equity Accounts payable Mortgages payable Common stock Retained earnings Total Liabilities & Equity PRINCE CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X7 Prince Corp Sword Co Consolidation Entries CR DR Consolidated Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $195,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Item Cash Accounts Receivable. Inventory. Land Buildings and Equipment Investment in Sword Company Cost of Goods Sold Depreciation Expense. Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Common Stock Retained Earnings Sales Income from Sword Company Additional Information $ Prince Corporation Debit. 84, 000 56, 000 175,000 82, 000 491, 000 248, 000 491, 000 24,000 72, 000 52, 000 $1,775, 000. Credit. $ 146, 000 57,000 186, 000 287, 000 338, 000 688, 000 73,000 $1,775, 000 Sword Company Debit $ 27,000 61,000 22,000 157, 000 256, 000 14,000 72,000 20,000 $738, 000 Credit $ 70,000 22, 000 86, 000 46, 000 96, 000 418, 000 $738, 000 1. On January 1, 20X7, Sword reported net assets with a book value of $142,000. A total of $20,000 of the acquisition price is applied to goodwill, which was not impaired in 20X7. 2. Sword's depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment. 3. Prince used the equity-method in accounting for its investment in Sword. 4. Detailed analysis of receivables and payables showed that Sword owed Prince $17,000 on December 31, 20X7. Required: a. Prepare all journal entries recorded by Prince with regard to its investment in Sword during 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Income Statement Sales Less: COGS Less: Depreciation expense Less: Other expenses Income from Sword Co. Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Assets Cash Accounts receivable Inventory Land Buildings & equipment Less: Accumulated depreciation Investment in Sword Co. Goodwill Total Assets Liabilities & Equity Accounts payable Mortgages payable Common stock Retained earnings Total Liabilities & Equity PRINCE CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X7 Prince Corp Sword Co Consolidation Entries CR DR Consolidated
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Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
Posted Date:
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