Question
In: Accounting
Stage Company operates on a calendar-year basis, reporting its results of operations quarterly. For the first...
Stage Company operates on a calendar-year basis, reporting its
results of operations quarterly. For the first quarter of 20X1,
Stage reported sales of $244,000 and operating expenses of $184,000
and paid dividends of $13,000. On April 1, 20X1, Parachute Theaters
Inc. acquired 85 percent of Stage’s common stock for $765,000. At
that date, the fair value of the noncontrolling interest was
$135,000, and Stage had 100,000 outstanding shares of $1 par common
stock, originally issued at $6 per share. The differential is
related to goodwill. On December 31, 20X1, the management of
Parachute Theaters reviewed the amount attributed to goodwill as a
result of its purchase of Stage common stock and concluded that
goodwill was not impaired.
Stage’s retained earnings statement for the full year 20X1 appears
as follows:
| Retained Earnings, January 1, 20X1 | $ | 141,000 | ||
| Net Income | 166,000 | |||
| Dividends | (35,000 | ) | ||
| Retained Earnings, December 31, 20X1 | $ | 272,000 | ||
Parachute Theaters accounts for its investment in Stage using the
equity method.
Required:
a. Present all entries that Parachute Theaters would have recorded
in accounting for its investment in Stage during 20X1. (If
no entry is required for a transaction/event, select "No journal
entry required" in the first account field.)
-
A
Record the purchase of Stage Company stock.
-
B
Record the equity-method income.
-
C
Record the dividends from Stage Company.
-
b. Present all consolidation entries needed in a worksheet to prepare a complete set of consolidated financial statements for the year 20X1.
-
A
Record the preacquisition income and dividends consolidation entry.
-
B
Record the basic consolidation entry.
-
C
Record the excess value (differential) reclassification entry.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations....
Sunshine Company is a calendar year accrual-basis taxpayer and
is in its first year of operations. Sunshine Company had the
following income, expense, and loss items for the current year:
Sales
$650,000
Corporate dividend (from 5% owned corporation)
60,000
Municipal bond interest
25,000
Long-term capital gain
0
Short-term capital loss
(8,000)
Cost of goods sold
320,000
Depreciation
65,000
Nondeductible fines
4,000
Advertising
7,000
Utilities
6,000
Rent
5,000
Furthermore, Sunshine’s liabilities (all recourse) increased
from $0 on 1/1 to $300,000 on...
Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations....
Sunshine Company is a calendar year accrual-basis taxpayer and
is in its first year of operations. Sunshine Company had the
following income, expense, and loss items for the current year:
Sales
$650,000
Corporate dividend (from 5% owned corporation)
60,000
Municipal bond interest
25,000
Long-term capital gain
0
Short-term capital loss
(8,000)
Cost of goods sold
320,000
Depreciation
65,000
Nondeductible fines
4,000
Advertising
7,000
Utilities
6,000
Rent
5,000
Furthermore, Sunshine’s liabilities (all recourse) increased
from $0 on 1/1 to $300,000 on...
Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations....
Sunshine Company is a calendar year accrual-basis taxpayer and
is in its first year of operations. Sunshine Company had the
following income, expense, and loss items for the current year:
Sales
$650,000
Corporate dividend (from 5% owned corporation)
60,000
Municipal bond interest
25,000
Long-term capital gain
0
Short-term capital loss
(8,000)
Cost of goods sold
320,000
Depreciation
65,000
Nondeductible fines
4,000
Advertising
7,000
Utilities
6,000
Rent
5,000
Furthermore, Sunshine’s liabilities (all recourse) increased
from $0 on 1/1 to $300,000 on...
Meganol Company is a calendar year accrual-basis taxpayer and is in its first year of operations....
Meganol Company is a calendar year accrual-basis taxpayer and is
in its first year of operations. Meganol Company had the following
income, expense, and loss items for the current year:
Sales
$650,000
Corporate dividend (from 5% owned corporation)
60,000
Municipal bond interest
25,000
Long-term capital gain
0
Short-term capital loss
(8,000)
Cost of goods sold
320,000
Depreciation
65,000
Nondeductible fines
4,000
Advertising
7,000
Utilities
6,000
Rent
5,000
Furthermore, Meganol's liabilities (all recourse) increased from
$0 on 1/1 to $300,000 on...
Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations....
Sunshine Company is a calendar year accrual-basis taxpayer and
is in its first year of operations. Sunshine Company had the
following income, expense, and loss items for the current year:
Sales
$650,000
Corporate dividend (from 5% owned corporation)
60,000
Municipal bond interest
25,000
Long-term capital gain
0
Short-term capital loss
(8,000)
Cost of goods sold
320,000
Depreciation
65,000
Nondeductible fines
4,000
Advertising
7,000
Utilities
6,000
Rent
5,000
Furthermore, Sunshine’s liabilities (all recourse) increased
from $0 on 1/1 to $300,000 on...
Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations....
Sunshine Company is a calendar year accrual-basis taxpayer and
is in its first year of operations. Sunshine Company had the
following income, expense, and loss items for the current year:
Sales
$650,000
Corporate dividend (from 5% owned corporation)
60,000
Municipal bond interest
25,000
Long-term capital gain
0
Short-term capital loss
(8,000)
Cost of goods sold
320,000
Depreciation
65,000
Nondeductible fines
4,000
Advertising
7,000
Utilities
6,000
Rent
5,000
Furthermore, Sunshine’s liabilities (all recourse) increased
from $0 on 1/1 to $300,000 on...
Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations....
Sunshine Company is a calendar year accrual-basis taxpayer and
is in its first year of operations. Sunshine Company had the
following income, expense, and loss items for the current year:
Sales $650,000 Corporate dividend (from 5% owned corporation)
60,000 Municipal bond interest 25,000 Long-term capital gain 0
Short-term capital loss (8,000) Cost of goods sold 320,000
Depreciation 65,000 Nondeductible fines 4,000 Advertising 7,000
Utilities 6,000 Rent 5,000 Furthermore, Sunshine’s liabilities (all
recourse) increased from $0 on 1/1 to $300,000 on...
Shamsud Ltd. operates on a calendar-year basis. At the beginning of December 2016, the company had...
Shamsud Ltd. operates on a calendar-year basis. At the beginning
of December 2016, the company had the following current liabilities
on its books:
Accounts payable
$85,000
Rent payable
10,000
Warranty provision
12,000
Unearned revenue
14,000
In December, the following events occurred:
1.Shamsud purchased a new computer system on
account at a cost of $28,000, payable on January 15, 2017. In
addition to this, $4,000 was paid in cash to have the new system
installed and customized to the company's requirements....
An Enterprise Fund that operates on a calendar year basis pays $18,000 for a three-year insurance...
An Enterprise Fund that operates on a calendar year basis pays
$18,000 for a three-year insurance policy on January 1, 2008. In
its financial statements for the year ended December 31, 2008, the
Enterprise Fund should report:
a. an expense of $6,000; and an asset of $12,000
b. an expense of $18,000
c. an expense of $12,00; and an asset of $6,000
d. an asset of $18,000; and an expense of $6,000
At December 31, 2017, Hawke Company reports the following results for its calendar year.
At December 31, 2017, Hawke Company reports the following results for its calendar year.
Cash sales
$
1,558,750
Credit sales
2,963,000
In addition, its unadjusted trial balance includes the following items.
Accounts receivable
$
897,789
debit
Allowance for doubtful accounts
29,350
debit
At December 31, 2017, Hawke Company reports the following results for its calendar year.
Cash sales
$
1,558,750
Credit...
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