PROBLEM 1: On January 1, 2016 Clinton Company purchased 100 of


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PROBLEM 1: On January 1, 2016 Clinton Company purchased 100 of the 1000 shares of Sanders Company for $4000. At this time the book value of Sanders Company was $40,000. In 2016 Sanders Company reported income of $3,000 and paid no dividends. On 12/31/2016 Sanders’ Company stock was selling for $44 per share. At this time Clinton does not have influence over Sanders. On January 2, 2017 Clinton purchased another 150 shares of Sanders Company for $6750. With this purchase, Clinton now sits on the board of Sanders Company. During 2017, Sanders reported income of $5000 and paid a $3000 in dividends. On 12/31/2017 Sanders’ stock was selling for $46 per share. In 2018 Sanders Company reported a loss of $1000 and paid a $2000 dividend. On 12/31/2018 Sanders’ stock was selling for $38 per share. On January 10th 2019 Clinton Company sold 200 of its shares in Sanders’ Company at $41 per share. After this sale, Clinton was removed from the board of Sanders Company and Clinton no longer has influence over Sanders Company. In 2019 Sanders reported income of $6000 and paid $1000 in dividends. On 12/31/2019 the market price of Sanders stock was $39. On January 14th 2020 Clinton sold its remain Sanders stock at $40 per share. REQUIRED: MAKE ALL THE NECESSARY JOURNAL ENTRIES FOR CLINTON WITH RESPECT TO ITS INVESTMENT IN SANDERS FROM 2016 TO 2020….DON’T FORGET THE ORIGINAL PURCHASE OF SANDERS STOCK ON 1/1/2016 PROBLEM 2: GAGA AND BIEBER COMPANIES HAVE THE FOLLOWING BALANCE SHEETS ON JANUARY 1, 2016 GAGABIEBER CASH10,000,000500,000 A/R 5,000,000200,000 EQUIPMENT10,000,0001,000,000 A/D EQUIPMENT1,000,000100,000 LAND1,000,000200,000 TOTAL ASSETS25,000,0001,800,000 NOTE PAYABLE5,000,000800,000 COMMON STOCK10,000,000600,000 RETAINED EARNINGS10,000,000400,000 ON JANUARY 2ND GAGA ACQUIRED ALL OF THE OUTSTANDING STOCK OF BIEBER COMPANY FROM BIEBER’S STOCKHOLDERS BY ISSUING 500,000 SHARES OF GAGA STOCK WHEN GAGA HAD A MARKET VALUE OF $5 PER SHARE. ON JANUARY 2ND THE FAIR MARKET VALUE OF BIEBER’S EQUIPMENT WAS $1,100,000 AND THE FAIR MARKET VALUE OF BIEBER’S LAND WAS $50,000. BIEBER WILL CONTINUE TO EXIST AFTER THIS ACQUISITION. REQUIRED: MAKE THE JOURNAL ENTRY GAGA MAKES WHEN IT ACQUIRES ALL OF THE STOCK OF BIEBER BY ISSUING ITS 500,000 SHARES MAKE THE JOURNAL ENTRY BIEBER MAKES WHEN ITS STOCKHOLDERS SELL THEIR STOCK TO GAGA FOR GAGA STOCK PREPARE A CONSOLIDATED BALANCE SHEET ON JANUARY 3RD PREPARE ANY NECESSARY WORKSHEET ENTRIES NEEDED TO CONSTRUCT THE CONSOLIDATED BALANCE SHEET PROBLEM 3: GAGA AND BIEBER COMPANIES HAVE THE FOLLOWING BALANCE SHEETS ON JANUARY 1, 2016 GAGABIEBER CASH10,000,000500,000 A/R 5,000,000200,000 EQUIPMENT10,000,0001,000,000 A/D EQUIPMENT1,000,000100,000 LAND1,000,000200,000 TOTAL ASSETS25,000,0001,800,000 NOTE PAYABLE5,000,000800,000 COMMON STOCK10,000,000600,000 RETAINED EARNINGS10,000,000400,000 ON JANUARY 2ND GAGA ACQUIRED 80% OF THE OUTSTANDING STOCK OF BIEBER COMPANY FROM BIEBER’S STOCKHOLDERS BY ISSUING 500,000 SHARES OF GAGA STOCK WHEN GAGA HAD A MARKET VALUE OF $5 PER SHARE. ON JANUARY 2ND THE FAIR MARKET VALUE OF BIEBER’S EQUIPMENT WAS $1,100,000 AND THE FAIR MARKET VALUE OF BIEBER’S LAND WAS $50,000. BIEBER WILL CONTINUE TO EXIST AFTER THIS ACQUISITION. REQUIRED: MAKE THE JOURNAL ENTRY GAGA MAKES WHEN IT ACQUIRES 80% OF THE STOCK OF BIEBER BY ISSUING ITS 500,000 SHARES MAKE THE JOURNAL ENTRY BIEBER MAKES WHEN ITS STOCKHOLDERS SELL 80% OF THEIR STOCK TO GAGA FOR GAGA STOCK PREPARE A CONSOLIDATED BALANCE SHEET ON JANUARY 3RD PREPARE ANY NECESSARY WORKSHEET ENTRIES NEEDED TO CONSTRUCT THE CONSOLIDATED BALANCE SHEET PROBLEM 4 (A CONTINUATION OF PROBLEM 3) AT THE END OF 2016 GAGA AND BIEBER HAD THE FOLLOWING FINANCIAL STATEMENTS: INCOME STATEMENT GAGABIEBER SALES3,000,000200,000 SALARY EXPENSE400,00050,000 DEPRECIATION EXP1000000100,000 INVESTMENT INC. a0 INCOME B 50000 BALANCE SHEET GAGABIEBER CASH11,000,000630,000 A/R 5,000,000200,000 EQUIPMENT10,000,0001,000,000 A/D EQUIPMENT2,000,000200,000 LAND1,000,000200,000 INVESTME

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