Georgia, Inc. bought 30% of Carolina Company on January 1, 2016 for $225,000. The equity method...

Georgia, Inc. bought 30% of Carolina Company on January 1, 2016 for $225,000. The equity method was used. No amortization was required. In 2016, Carolina shipped to Georgia merchandise with a cost of $12,000 and a selling price of $15,600. One-third of the merchandise remained in Georgia's inventory at year-end and was sold in 2017. In 2017, Carolina received merchandise from Georgia, who recorded a gross profit of $18,000 on the sale. One-fourth of the merchandise remainded in ending inventory, Carolina reported net income of $50,000 in 2016 and $62,000 in 2017. Dividends of $8,000 were paid to Georgia each year. Prepare all equity method entries for 2016 and 2017.

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

3. Georgia, Inc. bought 30% of Carolina Company on January 1, 2016 for $225,000. The equity...

3. Georgia, Inc. bought 30% of Carolina Company on January 1, 2016 for $225,000. The equity method was used. No amortization was required. In 2016, Carolina shipped to Georgia merchandise with a cost of $12,000 and a selling price of $15,600. One-third of the merchandise remained in Georgia’s inventory at year-end and was sold in 2017. In 2017, Carolina received merchandise from Georgia, who recorded a gross profit of $18,000 on the sale. One-fourth of the merchandise remained in ending...

Cayman Inc. bought 30% of Maya Company on January 1, 2018 for $450,000. The equity method...

Cayman Inc. bought 30% of Maya Company on January 1, 2018 for $450,000. The equity method of accounting was used. The book value and fair value of the net assets of Maya on that date were $1,500,000. Maya began supplying inventory to Cayman as follows: Cost to Maya Transfer Price Amount Held by Cayman at Year-End 2018 $ 30,000 $ 45,000 $9,000 2019 $ 48,000 $ 80,000 20,000 Maya reported net income of $100,000 in 2018 and $120,000 in 2019...

Potter Corporation buys 30% of Sunshine Supply Company on January 1, 2017, for $300,000. The equity method...

Potter Corporation buys 30% of Sunshine Supply Company on January 1, 2017, for $300,000. The equity method of accounting is to be used. Sunshine’s net assets on that date were $750,000. Any excess of cost over book value is attributable to a customer list with a 10-year remaining life. Sunshine immediately begins supplying inventory to Potter as follows: Year Cost to Sunshine Transfer Price Sunshine’s Gross Profit % Amount Held By Potter at Year-end (at transfer price) 2017 $70,000 $100,000 30% $25,000 2018 $96,000...

Exercise 12-23 (Algo) Equity method [LO12-6, 12-7] On January 1, 2021, Cameron Inc. bought 20% of...

Exercise 12-23 (Algo) Equity method [LO12-6, 12-7] On January 1, 2021, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction Company for $240 million cash, giving Cameron the ability to exercise significant influence over Lake’s operations. At the date of acquisition of the stock, Lake's net assets had a fair value of $600 million. Its book value was $500 million. The difference was attributable to the fair value of Lake's buildings and its land exceeding book value,...

Dosmann, Inc., bought all outstanding shares of Lizzi Corporation on January 1, 2016, for $830,000 in...

Dosmann, Inc., bought all outstanding shares of Lizzi Corporation on January 1, 2016, for $830,000 in cash. This portion of the consideration transferred results in a fair-value allocation of $63,000 to equipment and goodwill of $109,200. At the acquisition date, Dosmann also agrees to pay Lizzi’s previous owners an additional $198,000 on January 1, 2018, if Lizzi earns a 10 percent return on the fair value of its assets in 2016 and 2017. Lizzi’s profits exceed this threshold in both...

On January 1, 2016, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction...

On January 1, 2016, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction Company for $300 million cash. At the date of acquisition of the stock, Lake's net assets had a fair value of $900 million. Their book value was $800 million. The difference was attributable to the fair value of Lake’s buildings exceeding book value. Lake's net income for the year ended December 31, 2016, was $150 million. During 2016, Lake declared and paid cash dividends...

On January 1, 2018, Cameron Inc. bought 30% of the outstanding common stock of Lake Construction...

On January 1, 2018, Cameron Inc. bought 30% of the outstanding common stock of Lake Construction Company for $600 million cash. At the date of acquisition of the stock, Lake's net assets had a fair value of $800 million. Their book value was $700 million. The difference was attributable to the fair value of Lake's buildings and its land exceeding book value, each accounting for one-half of the difference. Lake’s net income for the year ended December 31, 2018, was...

On January 1, 2018, Cameron Inc. bought 30% of the outstanding common stock of Lake Construction...

On January 1, 2018, Cameron Inc. bought 30% of the outstanding common stock of Lake Construction Company for $420 million cash. At the date of acquisition of the stock, Lake's net assets had a fair value of $800 million. Their book value was $700 million. The difference was attributable to the fair value of Lake's buildings and its land exceeding book value, each accounting for one-half of the difference. Lake’s net income for the year ended December 31, 2018, was...

On January 1, 2016, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this...

On January 1, 2016, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $114,000. The 2016 ending inventory, valued at year-end costs, was $165,000. The relative cost index for this inventory in 2016 was 1.20. Suppose that Badger's 2017 ending inventory, valued at year-end costs, was $176,400 and that the relative cost index for this inventory in 2017 was 1.26. In determining the inventory balance should Badger report in its 12/31/17 balance sheet:

On January 1, 2016, Gerlach Inc. had the following account balances in its shareholders' equity accounts....

On January 1, 2016, Gerlach Inc. had the following account balances in its shareholders' equity accounts. Common stock, $1 par, 250,000 shares issued 250,000 Paid-in capital—excess of par, common 500,000 Paid-in capital—excess of par, preferred 100,000 Preferred stock, $100 par, 10,000 shares outstanding 1,000,000 Retained earnings 2,000,000 Treasury stock, at cost, 5,000 shares 25,000 During 2016, Gerlach Inc. had several transactions relating to common stock. January 15: Declared a property dividend of 100,000 shares of Slowdown Company (book value $10...

Subjects