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Matthews Co. acquired all of the common stock of Jackson Co. on January 1, 2020. As...

Matthews Co. acquired all of the common stock of Jackson Co. on January 1, 2020. As of that date, Jackson had the following trial balance:

Debit Credit
Accounts payable $ 60,000
Accounts receivable $ 50,000
Additional paid-in capital 60,000
Buildings (net) (20-year life) 140,000
Cash and short-term investments 70,000
Common stock 300,000
Equipment (net) (8-year life) 240,000
Intangible assets (indefinite life) 110,000
Land 90,000
Long-term liabilities (mature 12/31/22) 180,000
Retained earnings, 1/1/20 120,000
Supplies 20,000
Totals $ 720,000 $ 720,000

During 2020, Jackson reported net income of $96,000 while paying dividends of $12,000. During 2021, Jackson reported net income of $132,000 while paying dividends of $36,000. Assume that Matthews Co. acquired the common stock of Jackson Co. for $588,000 in cash. As of January 1, 2020, Jackson's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to an unamortized patent to be amortized over 10 years.

Matthews decided to use the equity method for this investment.

Required:

Using Excel

(A.) Prepare consolidation worksheet entries for December 31, 2020.

(B.) Prepare consolidation worksheet entries for December 31, 2021.

Solutions

Expert Solution

Answer :

ekkarill92 answered 1 year ago
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