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

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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 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.

Business

1 answer:

Nady [3.6K] · Answer 1 · 2026-04-09T16:00:17+03:00

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.