Prepare journal entry, consolidation worksheet, consolidated balance sheet

Consolidated Worksheet and Balance Sheet on the Acquisition Date (Equity Method)Consolidated Worksheet and Balance Sheet on the Acquisition Date (Equity Method)

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

Peanut Company

Snoopy Company

Assets

  Cash

55,000

20,000

  Accounts Receivable

50,000

30,000

  Inventory

100,000

60,000

  Investment in Snoopy Stock

270,000

  Land

225,000

100,000

  Buildings & Equipment

700,000

200,000

  Accumulated Depreciation

 (400,000)

 (10,000)

Total Assets

1,000,000

400,000

Liabilities & Stockholders’ Equity

  Accounts Payable

75,000

25,000

  Bonds Payable

200,000

75,000

  Common Stock

500,000

200,000

  Retained Earnings

 225,000

100,000

Total Liabilities & Equity

1,000,000

400,000

Required:

  • Prepare the journal entry on Peanut’s books for the acquisition of Snoopy on January 1, 20X8.
  • Prepare a consolidation worksheet on the acquisition date, January 1, 20X8, in good form.
  • Prepare a consolidated balance sheet on the acquisition date, January 1, 20X8, in good form.

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