Question

In: Accounting

3)   The December 31, 2019, trial balances for Paul Corporation and its subsidiary Stuart are listed below....

3)   The December 31, 2019, trial balances for Paul Corporation and its subsidiary Stuart are listed below.

                                                          Paul Corporation                          Stuart Company

                                                        Debit              Credit                  Debit               Credit

      Cash                                       $  30,000                                    $   8,000                        

      Receivables (net)                        13,000                                       12,000

      Inventory, 1/1                            12,000                                       10,000

      Investment in S                         150,000                                                 

      Plant and equipment (net)         250,000                                     195,000

      Land                                         100,000                                       80,000

      Accounts payable                                            $  30,000                                   $  10,000

      Other liabilities                                                   85,000                                     100,000

      Common stock ($10 par)                                   250,000                                     100,000

      Retained earnings, 1/1                                      168,000                                       84,000

      Dividends declared                     15,000                                       20,000                        

      Sales                                                                132,000                                       91,000

      Dividend income                                                 15,000

      Purchases                                   60,000                                       30,000

      Other expenses                           50,000           _______                30,000          _______

                                                    $680,000          $680,000           $385,000          $385,000

      Inventory, 12/31                       $15,000                                     $12,000

A.   Prepare the journal entries found on Paul’s books for 2019

To record P’s share of S’s dividends

B.   Prepare the workpaper entries for 2019

To establish reciprocity (convert to equity)

To eliminate P’s share of S’s equity

To allocate the difference between implied and book value

To eliminate P’s share of S’s dividends

Solutions

Expert Solution

ekkarill92 answered 3 months ago
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