Peanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for $270,000 on January 1, 20X8, when the book v

Question

3 years ago

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Peanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for $270,000 on January 1, 20X8, when the book v

alue of Snoopy’s net assets was equal to $300,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, are as follows:
Peanut Company Snoopy Company
Debit Credit Debit Credit
Cash $158,000 $80,000
Accounts Receivable 165,000 65,000
Inventory 200,000 75,000
Investment in Snoopy
Stock 319,500 0
Land 200,000 100,000
Buildings and
Equipment 700,000 200,000
Cost of Goods Sold 200,000 125,000
Depreciation Expense 50,000 10,000
Selling & Administrative
Expense 225,000 40,000
Dividends Declared 100,000 20,000
Accumulated
Depreciation 450,000 20,000
Accounts Payable 75,000 60,000
Bonds Payable 200,000 85,000
Common Stock 500,000 200,000
Retained Earnings 225,000 100,000
Sales 800,000 250,000
Income from Snoopy 67,500 0
Total $2,317,500 $2,317,500 $715,000 $715,000
Required:
A. Prepare any equity method entry(ies) related to the investment in Snoopy Company during 20X8.
B. Prepare a consolidated worksheet on the acquisition date, January 1, 2018.

Business

1 answer:

docker41 [41] · Answer 1 · 2022-08-28T10:43:10+03:00

Answer:

Investment in Snoopy co : 270000

Cash : 270000

Initial investment in snoopy co

investment in snoopy co : 67500

income from snoopy co : 67500

Peanut co's 90% share of snoopy co's 20x8 income

Cash : 18000

investment in snoopy co : 18000

<h3>Explanation:</h3><h3><em> prepare any equity method entries</em></h3>