Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2017, for $408,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $535,000 and the fair value of the 20 percent noncontrolling interest was $102,000. No excess fair value over book value amortization accompanied the acquisition.

The following selected account balances are from the individual financial records of these two companies as of December 31, 2018:

Protrade sells Seacraft a building on January 1, 2017, for $82,000, although its book value was only $51,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight-line method with no salvage value.
Determine balances for the following items that would appear on consolidated financial statements for 2018:

Buildings (net)

Operating expenses

Net income attributable to non-controlling interest

Albuquerque, Inc., acquired 36,000 shares of Marmon Company several years ago for $900,000. At the acquisition date, Marmon reported a book value of $980,000, and Albuquerque assessed the fair value of the noncontrolling interest at $100,000. Any excess of acquisition-date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses.

At the present time, Marmon reports $1,110,000 as total stockholders’ equity, which is broken down as follows:

View the following as independent situations:

1. a. & b. Marmon sells 8,000 and 5,000 shares of previously unissued common stock to the public for $30 and $20 per share. Albuquerque purchased none of this stock. What journal entry should Albuquerque make to recognize the impact of this stock transaction? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations.)

On January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,295,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $880,000, retained earnings of $430,000, and a noncontrolling interest fair value of $555,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.

During the next two years, Smashing reported the following:

Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 50 percent of the current year purchases remain in Smashing's inventory.

1. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2018.
2. Prepare the worksheet adjustments for the December 31, 2018, consolidation of Corgan and Smashing.

Pillow Corporation acquired 80 percent ownership of Sheet Company on January 1, 20X7, for $173,000. At that date, the fair value of the noncontrolling interest was $43,250. The trial balances for the two companies on December 31, 20X7, included the following amounts:

Additional Information

1. On January 1, 20X7, Sheet reported net assets with a book value of $150,000 and a fair value of $191,250. Accumulated depreciation on Buildings and Equipment was $60,000 on the acquisition date.
2. Sheet’s depreciable assets had an estimated economic life of 11 years on the date of combination. Goodwill of $25,000 was recorded at the acquisition.
3. Pillow used the equity method in accounting for its investment in Sheet.
4. Detailed analysis of receivables and payables showed that Sheet owed Pillow $16,000 on December 31, 20X7.

a. Prepare all journal entries recorded by Pillow with regard to its investment in Sheet during 20X7.Record the initial investment in Sheet Company

• Record the initial investment in Sheet Company

• B

  Record Pillow Corporation's 80% share of Sheet Company's 20X7 income.

• C

  Record Pillow Corporation's 80% share of Sheet Company's 20X7 dividend.

• D

  Record the amortization of the excess acquisition price.

A retail company sells electronics products including mouse and keyboard. Mouse and keyboard are acquired from distinct suppliers. The monthly demand for a mouse is 2000, while the monthly demand for a keyboard is 1000 products. Mouse costs to company $12 and keyboard's cost are $18. The company has an annual holding cost of 20%, and the fixed shipment cost is $300. The procurement manager is not sure whether to order the mouse and keyboard separately or jointly. Assist with her decision making by calculating the following: 1) Optimal order size, 2) Optimal order frequency, 3) Cycle inventory, 4) Total cost of holding and ordering. Hint: Check the problem where products ordered and delivered separately vs. jointly.

Solve the problem using EXCEL.

On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $295,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Marshall paid $26,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $11,500 in connection with stock issuance costs.

Prior to these transactions, the balance sheets for the two companies were as follows:

Note: Parentheses indicate a credit balance.

In Marshall’s appraisal of Tucker, it deemed three accounts to be undervalued on the subsidiary’s books: Inventory by $7,550, Land by $17,600, and Buildings by $25,400. Marshall plans to maintain Tucker’s separate legal identity and to operate Tucker as a wholly owned subsidiary.

1. Determine the amounts that Marshall Company would report in its postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall’s retained earnings. Other accounts will also need to be added or adjusted to reflect the journal entries Marshall prepared in recording the acquisition.
2. To verify the answers found in part (a), prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.

Determine the amounts that Marshall Company would report in its postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall’s retained earnings. Other accounts will also need to be added or adjusted to reflect the journal entries Marshall prepared in recording the acquisition.

PART A

PART B

On January 1, 20X7, Pepper Company acquired 90 percent of the outstanding common stock of Salt Corporation for $1,242,000. On that date, the fair value of noncontrolling interest was equal to $138,000. The entire differential was related to land held by Salt. At the date of acquisition, Salt had common stock outstanding of $520,000, additional paid-in capital of $200,000, and retained earnings of $540,000. During 20X7, Salt sold inventory to Pepper for $440,000. The inventory originally cost Salt $360,000. By year-end, 30 percent was still in Pepper's ending inventory. During 20X8, the remaining inventory was resold to an unrelated customer. Both Pepper and Salt use perpetual inventory systems.

Income and dividend information for both Pepper and Salt for 20X7 and 20X8 are as follows:

Assume Pepper uses the fully adjusted equity method to account for its investment in Salt.

Required:
a. Present the worksheet consolidation entries necessary to prepare consolidated financial statements for 20X7.
b. Present the worksheet consolidation entries necessary to prepare consolidated financial statements for 20X8.

On January 1, 20X7, Pepper Company acquired 90 percent of the outstanding common stock of Salt Corporation for $1,242,000. On that date, the fair value of noncontrolling interest was equal to $138,000. The entire differential was related to land held by Salt. At the date of acquisition, Salt had common stock outstanding of $520,000, additional paid-in capital of $200,000, and retained earnings of $540,000. During 20X7, Salt sold inventory to Pepper for $440,000. The inventory originally cost Salt $360,000. By year-end, 30 percent was still in Pepper's ending inventory. During 20X8, the remaining inventory was resold to an unrelated customer. Both Pepper and Salt use perpetual inventory systems.

Income and dividend information for both Pepper and Salt for 20X7 and 20X8 are as follows:

Assume Pepper uses the fully adjusted equity method to account for its investment in Salt.

Required:
a. Present the worksheet consolidation entries necessary to prepare consolidated financial statements for 20X7.
b. Present the worksheet consolidation entries necessary to prepare consolidated financial statements for 20X8.

On January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,120,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $830,000, retained earnings of $380,000, and a noncontrolling interest fair value of $480,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.

During the next two years, Smashing reported the following:

Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 30 percent of the current year purchases remain in Smashing's inventory.

1. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2018.
2. Prepare the worksheet adjustments for the December 31, 2018, consolidation of Corgan and Smashing.

On January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,015,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $800,000, retained earnings of $350,000, and a noncontrolling interest fair value of $435,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.

During the next two years, Smashing reported the following:

Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 30 percent of the current year purchases remain in Smashing's inventory.

A) Prepare Journal entries for G*, S, A, I, D, E, TI, G. with debit and credits to each account.