Pillow Corporation acquired 80 percent ownership of Sheet Company on January 1, 20X7, for $173,000. At...

Pillow Corporation acquired 80 percent ownership of Sheet Company on January 1, 20X7, for $173,000. At that date, the fair value of the noncontrolling interest was $43,250. The trial balances for the two companies on December 31, 20X7, included the following amounts:

	Pillow Corporation						Sheet Company
Item	Debit			Credit			Debit			Credit
Cash		$	38,000					$	25,000
Accounts Receivable			50,000						55,000
Inventory			240,000						100,000
Land			80,000						20,000
Buildings & Equipment			500,000						150,000
Investment in Sheet Company			202,000
Cost of Goods Sold			500,000						250,000
Depreciation Expense			25,000						15,000
Other Expenses			75,000						75,000
Dividends Declared			50,000						20,000
Accumulated Depreciation					$	155,000					$	75,000
Accounts Payable						70,000						35,000
Mortgages Payable						200,000						50,000
Common Stock						300,000						50,000
Retained Earnings						290,000						100,000
Sales						700,000						400,000
Income from Sheet Company						45,000
		$	1,760,000		$	1,760,000		$	710,000		$	710,000

Additional Information

On January 1, 20X7, Sheet reported net assets with a book value of $150,000 and a fair value of $191,250. Accumulated depreciation on Buildings and Equipment was $60,000 on the acquisition date.
Sheet’s depreciable assets had an estimated economic life of 11 years on the date of combination. Goodwill of $25,000 was recorded at the acquisition.
Pillow used the equity method in accounting for its investment in Sheet.
Detailed analysis of receivables and payables showed that Sheet owed Pillow $16,000 on December 31, 20X7.

a. Prepare all journal entries recorded by Pillow with regard to its investment in Sheet during 20X7.Record the initial investment in Sheet Company

Record the initial investment in Sheet Company
B

Record Pillow Corporation's 80% share of Sheet Company's 20X7 income.
C

Record Pillow Corporation's 80% share of Sheet Company's 20X7 dividend.
D

Record the amortization of the excess acquisition price.

Expert Solution

ekkarill92 answered 7 months ago

Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20X1, for $152,000....

Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20X1, for $152,000. On that date, the fair value of the noncontrolling interest was $38,000, and Slice reported retained earnings of $43,000 and had $99,000 of common stock outstanding. Pizza has used the equity method in accounting for its investment in Slice. Trial balance data for the two companies on December 31, 20X5, are as follows: Pizza Corporation Slice Products Company Item Debit Credit Debit Credit...

Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20X1, for $151,000....

Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20X1, for $151,000. On that date, the fair value of the noncontrolling interest was $37,750, and Slice reported retained earnings of $49,000 and had $92,000 of common stock outstanding. Pizza has used the equity method in accounting for its investment in Slice. Trial balance data for the two companies on December 31, 20X5, are as follows: Pizza Corporation Slice Products Company Item Debit Credit Debit Credit...

2. Loki Corporation acquired 80 percent ownership of Goose Company on January 1, 20X6, at underlying...

2. Loki Corporation acquired 80 percent ownership of Goose Company on January 1, 20X6, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Goose Company. Consolidated balance sheets at January 1, 20X8, and December 31, 20X8, are as follows: Item Jan 1, 20X8 Dec 31, 20X8 Cash $ 50,000 $ 80,000 Accounts Receivable 75,000 90,000 Inventory 85,000 100,000 Land 60,000 80,000 Buildings and Equipment 300,000...

Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for $280,500. Steal...

Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for $280,500. Steal reported the following net income and dividend payments: Year Net Income Dividends Paid 20X7 $ 53,000 $ 33,000 20X8 63,000 43,000 20X9 38,000 18,000 On January 1, 20X7, Steal had $253,000 of $8 par value common stock outstanding and retained earnings of $153,000, and the fair value of the noncontrolling interest was $187,000. Steal held land with a book value of $31,500 and a...

Pretzel Corporation acquired 100 percent of Stick Company’s outstanding shares on January 1, 20X7. Balance sheet...

Pretzel Corporation acquired 100 percent of Stick Company’s outstanding shares on January 1, 20X7. Balance sheet data for the two companies immediately after the purchase follow: Pretzel Corporation Stick Company Cash $ 87,000 $ 31,000 Accounts Receivable 96,000 53,000 Inventory 87,000 83,000 Buildings & Equipment 419,000 289,000 Less: Accumulated Depreciation (150,000 ) (89,000 ) Investment in Stick Company 318,000 Investment in Stick Company Bonds 58,000 Total Assets $ 915,000 $ 367,000 Accounts Payable $ 58,000 $ 24,000 Bonds Payable 189,000...

Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $195,000. The trial...

Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $195,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Prince Corporation Sword Company Item Debit Credit Debit Credit Cash $ 83,000 $ 31,000 Accounts Receivable 67,000 72,000 Inventory 177,000 104,000 Land 81,000 26,000 Buildings and Equipment 491,000 159,000 Investment in Sword Company 255,000 Cost of Goods Sold 491,000 253,000 Depreciation Expense 21,000 11,000 Other Expenses 66,000 66,000 Dividends Declared 52,000...

Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $183,000. The trial...

Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $183,000. The trial balances for the two companies on December 31, 20X7, included the following amounts: Prince Corporation Sword Company Item Debit Credit Debit Credit Cash $ 88,000 $ 27,000 Accounts Receivable 53,000 58,000 Inventory 182,000 120,000 Land 86,000 22,000 Buildings and Equipment 491,000 155,000 Investment in Sword Company 233,000 Cost of Goods Sold 491,000 258,000 Depreciation Expense 21,000 11,000 Other Expenses 62,000 62,000 Dividends Declared 55,000...

Mill Corporation acquired 100 percent ownership of Roller Company on January 1, 20X8, for $118,000. At...

Mill Corporation acquired 100 percent ownership of Roller Company on January 1, 20X8, for $118,000. At that date, the fair value of Roller’s buildings and equipment was $19,000 more than the book value. Buildings and equipment are depreciated on a 10-year basis. Although goodwill is not amortized, Mill’s management concluded at December 31, 20X8, that goodwill involved in its acquisition of Roller shares had been impaired and the correct carrying value was $2,400. Trial balance data for Mill and Roller...

Mill Corporation acquired 100 percent ownership of Roller Company on January 1, 20X8, for $125,000. At...

Mill Corporation acquired 100 percent ownership of Roller Company on January 1, 20X8, for $125,000. At that date, the fair value of Roller’s buildings and equipment was $19,000 more than the book value. Buildings and equipment are depreciated on a 5-year basis. Although goodwill is not amortized, Mill’s management concluded at December 31, 20X8, that goodwill involved in its acquisition of Roller shares had been impaired and the correct carrying value was $2,600. Trial balance data for Mill and Roller...

Penn Corporation purchased 80 percent ownership of State Company on January 1, 20X2, at underlying book...

Penn Corporation purchased 80 percent ownership of State Company on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of State. On January 1, 20X4, Penn sold 2,000 shares of State's stock for $65,000 to Nonaffiliated Company and recorded a $12,000 increase in additional paid-in capital. Trial balances for the companies on December 31, 20X4, contain the following data: Penn Corporation State Company...

Question