Problem 8-10 (LO 5) Worksheet, purchase in blocks, subsidiary stock dividend, subsidiary purchase…


Question Description:

25

Problem 8-10 (LO 5) Worksheet, purchase in blocks, subsidiary stock dividend, subsidiary purchase… 1 answer below » Problem 8-10 (LO 5) Worksheet, purchase in blocks, subsidiary stock dividend, subsidiary purchase of parent shares, machinery sale, merchandise. On January 1, 20X3, Heckert Company purchases a controlling interest in Aker Company. The following information is available: a.    Heckert Company purchases 1,600 shares of Aker Company outstanding stock on January 1, 20X2, for $48,000 and purchases an additional 1,400 shares on January 1, 20X3, for $51,800. b.    An analysis of the stockholders’ equity accounts at December 31, 20X2, and 20X1, follows: View complete question » Problem 8-10 (LO 5) Worksheet, purchase in blocks, subsidiary stock dividend, subsidiary purchase of parent shares, machinery sale, merchandise. On January 1, 20X3, Heckert Company purchases a controlling interest in Aker Company. The following information is available: a.    Heckert Company purchases 1,600 shares of Aker Company outstanding stock on January 1, 20X2, for $48,000 and purchases an additional 1,400 shares on January 1, 20X3, for $51,800. b.    An analysis of the stockholders’ equity accounts at December 31, 20X2, and 20X1, follows: Required Heckert Company December 31, Aker Company December 31, 20X2 20X1 20X2 20X1 Common stock ($10 par). . . . . . . . . . . Common stock ($5 par). . . . . . . . . . . . $150,000 $150,000 $  20,000 $  20,000 Paid-in capital in excess of par . . . . . . 36,000 36,000 10,000 10,000 Retained earnings . . . . . . . . . . . . . . . . 378,000 285,000 112,000 82,000 Total . . . . . . . . . . . . . . . . . . . . . . . . $564,000 $471,000 $142,000 $112,000 c.    Aker Company’s marketable securities consist of 1,500 shares of Heckert Company stock purchased on June 15, 20X3, in the open market for $18,000. The securities are purchased as a temporary investment and are sold on January 15, 20X4, for $25,000. d.    On December 10, 20X3, Heckert Company declares a cash dividend of $0.50 per share, payable January 10, 20X4, to stockholders of record on December 20, 20X3. Aker Com- pany pays a cash dividend of $1 per share on June 30, 20X3, and distributes a 10% stock dividend on September 30, 20X3. The stock is selling for $15 per share ex-dividend on Sep- tember 30, 20X3. Aker Company pays no dividends in 20X2. e.    Aker Company sells machinery, with a book value of $4,000 and a remaining life of five years, to Heckert Company for $4,800 on December 31, 20X3. The gain on the sale is cred- ited to the other income account. f.    Aker Company includes all intercompany receivables and payables in its trade accounts receiv- able and trade accounts payable accounts. g. During 20X3, the following intercompany sales are made: Included in Purchaser’s Inventory at Net Sales December 31, 20X3 Heckert Company to Aker Company. . . . . . . . . . . . . . . . . . . $  78,000 $24,300 Aker Company to Heckert Company. . . . . . . . . . . . . . . . . . . 104,000 18,000 $182,000 $42,300 Heckert Company sells merchandise to Aker Company at cost. Aker Company sells mer- chandise to Heckert at the regular selling price to make a normal profit margin of 30%. There were no intercompany sales in prior years. The trial balances of the two companies at December 31, 20X3, are as follows: Heckert Company Aker Company Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,100 29,050 Marketable Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,000 18,000 Trade Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210,000 88,000 Allowance for Doubtful Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,800) (2,300) Intercompany Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,000 Inventories . . . . . . . . . . . …

Answer

25