LaTonia Chapter 8 & 10

LaTonia Chapter 8 & 10 - LaTonia Williamson Chapter...

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LaTonia Williamson Exercise 8-2 Part A Investment in Serbin Company 236,000 Cash 236,000 Loss on Revaluation* 15,000 Investment in Serbin Company 15,000 To adjust the first purchase to fair value Loss on Revaluation* 25,000 Investment in Serbin Company 25,000 To adjust the second purchase to fair value Cash 60,000 Dividend Income 60,000 Exercise 8-5 Part A 2010 Investment in Serbin Company 175,000 Cash 175,000 Retained Earnings 2600 Investment in Serbin Company 2600 Investment in Serbin Company 61250 Equity in Investee Income (.35 × $115,000) 61250 2011
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Investment in Serbin Company 201000 Cash 201000 Loss on Revaluation* 2600 Investment in Serbin Company 2600 To adjust the first purchase to fair value Loss on Revaluation * 4,500 Investment in Serbin Company 4,500 To adjust the second purchase to fair value Cash 54000 Investment in Serbin Company 54000 Investment in Serbin Company 40,000 Equity in Subsidiary Income 40000 Part B Equity in Subsidiary Income 263000 Dividends Declared - Serbin 25000 Investment in Serbin Company 211,111 Common Stock - Serbin 600000 1/1 Retained Earnings - Serbin 175000 Difference between Implied and Book Value 201000 Investment in Serbin Company* 429,300 Noncontrolling interest 47,700 * Goodwill 32,000 Difference between Implied and Book Value 32,000
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Problem 8-3 The accounts of Pyle Company and its subsidiary, Stern Company, are summarized below as of 12/11 Current Assets -Pyle $600000; Stern $320000 Investment in Stern Company-Pyle $480000 Other Assets- Pyle $1180000; Stern $668000 Dividends Declared 11/1- Pyle $80000; Stern $60000 Liabilities- Pyle $190000; Stern $90000 Common Stock $5 par- Pyle $500000; Stern $300000 Other Contributed Capital- Pyle $230000; Stern $180000 1/1 Retained Earnings- Pyle $1200000; Stern $292000 Net Income- Pyle $220000; Stern $186000 Pyle company made the following open market purchase and sale of Stern Company common stock: 1/09 purchase 51000 shares, cost $510000; 4/11 sold 3000 share, proceeds, $100000. The book value of Stern Company's net assets on 1/09, $600000 (including retained earnings of $120000) approximated the fair value of those net assets. Subsequent changes in book value of the net assets are entirely attributable to earnings of Stern Company. Stern Company earns its income evenly throughout the year. Prepare a consolidated financial statements workpaper as of 12/11. Begin the income statement section of the workpaper with "Net Income Before Dividend Income: which is $172000 and $186000 for Pyle Company and Stern Company. PYLE COMPANY AND SUBSIDIARY Consolidated Statements Workpaper For the Year Ended December 31, 2011 Pyle Stern Eliminations Noncontrolling Consolidated Company Company Dr. Cr. Interest Balances Income Statement Income before Dividend Income* $172,000 $186,000 $358,000 Dividend Income 48,000 (1) 48,000 Net/Consolidated Income 220,000 186,000 358,000 Subsidiary Income Sold (3) 2,325 2,325
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Noncontrolling Interest in Income (.2 × $186,000)
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This note was uploaded on 07/31/2011 for the course ACCT 401 taught by Professor Bennett during the Spring '08 term at Strayer.

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LaTonia Chapter 8 & 10 - LaTonia Williamson Chapter...

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