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 January 1, 20X8, follow: Peanut Company Snoopy Company
Assets
Cash $55,000 $20,000
Accounts Receivable 50,000 30,000
Inventory 100,000 60,000
Investment in Snoopy Company 270,000
Land 225,000 100,000
Buildings and Equipment 700,000 100,000
Accumulated Depreciation (400,000) (10,000)
Total Assets $1,000,000 $400,000
Liabilities and 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 and Equity $1,000,000 $400,000
Required:
a. Prepare the journal entry on Peanut's books for the acquisition of Snoopy on January 1, 20X8.
b. Prepare a consolidation worksheet on the acquisition date, January 1, 20X8.
c. Prepare a consolidated balance sheet on the acquisition date, January 1, 20X8.
Date Details Debit Credit
Jan. 1 Investment in Snoopy 270,000
Cash Account 270,000
To document the 90% investment in Snoopy.
Jan. 1 Cash 20,000
Accounts Receivable 30,000
Inventory 60,000
Land 100,000
Building, net 90,000
Goodwill on acquisition 100,000
Investment in Snoopy Company 270,000
Accounts Payable 25,000
Bonds Payable 75,000
Noncontrolling interest 30,000.
b. Consolidation Worksheet on January 1, 20X8:
Peanut Snoopy DR CR Consolidated
Company Company
Assets
Cash $55,000 $20,000 $75,000
Accounts Receivable 50,000 30,000 80,000
Inventory 100,000 60,000 160,000
Investment in Snoopy 270,000 270,000CR
Land 225,000 100,000 325,000
Buildings and Equipment 700,000 100,000 800,000
Accumulated Depreciation (400,000) (10,000) (410,000)
Goodwill 100,000
Total Assets $1,000,000 $400,000 $1,130,000
Liabilities and SE
Accounts Payable $75,000 $25,000 100,000
Bonds Payable 200,000 75,000 275,000
Common Stock 500,000 200,000 200,000 500,000
Retained Earnings 225,000 100,000 100,000 225,000
Noncontrolling interest 30,000
Total Liabilities and Equity $1,000,000 $400,000 $1,130,000
c. Consolidated Balance Sheet
Assets
Cash $75,000
Accounts Receivable 80,000
Inventory 160,000
Land 325,000
Buildings and Equipment 800,000
Accumulated Depreciation (410,000)
Goodwill 100,000
Total Assets $1,130,000
Liabilities and Stockholders' Equity
Accounts Payable $100,000
Bonds Payable 275,000
Common Stock 500,000
Retained Earnings 225,000
Noncontrolling interest 30,000
Total Liabilities and Equity $1,130,000
Explanation:
a) The trial balance data for Peanut and Snoopy as of January 1, 20X8 is as follows:
Peanut Snoopy
Company Company
Assets
Cash $55,000 $20,000
Accounts Receivable 50,000 30,000
Inventory 100,000 60,000
Investment in Snoopy Company 270,000
Land 225,000 100,000
Buildings and Equipment 700,000 100,000
Accumulated Depreciation (400,000) (10,000)
Total Assets $1,000,000 $400,000
Liabilities and SE
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 and Equity $1,000,000 $400,000.
c. Typically, they illustrate the elements that must be developed to generate the final deliverables.
Explanation:
The Work Breakdown Structure (WBS) serves as a method employed by project managers to systematically break down deliverables into smaller parts. It provides a structure that can be utilized for additional planning tasks. These are presented in an indented outline layout.
To calculate the overhead rate, we need to derive the ratio of total indirect costs to direct labor costs. Overhead rate = Indirect Cost / Direct labor cost. Total estimated overhead costs are calculated as $2,900,000 + $800,000, amounting to $3,700,000. Thus, the overhead rate is $3,700,000 divided by $80,000, yielding an overhead rate of 46.25. Consequently, the overhead rate for K company is 46.25.
Doc's ribhouse commenced with $52,000 in equity, generated $35,000 in net income, and distributed $12,000 in dividends. To find the ending equity, use the formula: Beginning Equity + Net Income - Dividends = Ending Equity. Plugging in the values gives us: $52,000 + $35,000 - $12,000 = Ending equity. This results in $52,000 + $23,000 = $75,000, confirming the ending equity is $75,000.
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