Prepare the workpaper eliminating entries necessary to prepare a consolidated statements workpaper…


Question Description:

33

Multiple Stock Purchases—Journal Entries Peck Company purchased Sanno Company common stock in a series of open-market cash purchases from 2009 through 2011 as follows: Dade Shares Acquired Cost January 1, 2009 1,800 $ 46,000 January 1, 2010 4,500 95,000 January 1, 2011 9,900 262,350 Sanno Company had 18,000 shares of $20 par value common stock outstanding during the entire period. Retained earnings balances for Sanno Company on relevant dates were January 1, 2009 $ 20,000 January 1, 2010 (30,000) January 1, 2011 85,000 December 31, 2011 170,000 Dividends in the amount of $50,000 were distributed by Sanno Company only in 2011. Any difference between implied and book values is assigned to goodwill. Peck Company uses the cost method to account for its investment in Sanno Company. Required: Prepare the journal entries that Peck Company would record on its books during 2011 to account for its investment in Sanno Company. Prepare the workpaper eliminating entries necessary to prepare a consolidated statements workpaper on December 31, 2011.

Answer

33