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Pinot Noir Company obtains 100% of Sangria Company's stock on January 1, 2016. As of that...

Pinot Noir Company obtains 100% of Sangria Company's stock on January 1, 2016. As of that date, Sangria has the following trial balance:

                                                                                                          Debit           Credit

Accounts payable                                                                                                $50,000

Accounts receivable                                                                         $40,000

Additional paid-in-capital                                                                                     $50,000

Buildings(4-year remaining life)                                                      $120,000

Cash and short-term investment                                                      $60,000

Common stock                                                                                                  $250,000

Equipment (5 year remaining life)                                                   $200,000

Inventory                                                                                           $90,000

Land                                                                                                  $80,000

Long term liabilities (mature 12/31/19)                                                                $150,000

Retained earnings, 1/1/16                                                                                   $100,000

Supplies                                                                                            $10,000

      Totals                                                                                         $600,000      $600,000

During 2016, Sangria reported net income of $80,000 while declaring and paying dividends of $10,000. During 2017, Sangria reported net income of $110,000 while declaring and paying dividends of $30,000

Assume that Pinot Noir company acquires Sangria's common stock for $490,000 in cash. As of January 1,2016, Sangria's land had a fair value of $90,000, its building were valued at $200,000, and its equipment was appraised at $180,000. Pinot Noir uses the equity method for this investment.

Required:

Prepare consolidation worksheet entries for December 31, 2016 and Dec 31,2017.

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ekkarill92 answered 1 year ago
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