cost method the trial balance data presented in p7 33 can be converted to reflect us 733538
Cost Method
The trial balance data presented in P7 33 can be converted to reflect use of the cost method by inserting the following amounts in place of those presented for Prime Company:
|
Investment in Lane Company Stock |
$160,000 |
|
Beginning Retained Earnings |
348,000 |
|
Income from Subsidiary |
0 |
|
Dividend Income |
28,000 |
Required
a. Prepare the journal entries that would have been recorded on Prime’s books during 20X7 under the cost method.
b. Prepare all elimination entries needed to complete a consolidation worksheet as of December 31, 20X7, assuming Prime has used the cost method.
c. Complete a three part consolidation worksheet as of December 31, 20X7.
Data P7 33:
|
|
Prime Company |
Lane Company |
|||
|
Item |
Debit |
Credit |
Debit |
Credit |
|
|
Cash & Accounts Receivable |
$ 151,000 |
|
$ 55,000 |
|
|
|
Inventory |
240,000 |
|
100,000 |
|
|
|
Land |
100,000 |
|
80,000 |
|
|
|
Buildings & Equipment |
500,000 |
|
150,000 |
|
|
|
Investment in Lane Company Stock |
201,600 |
|
|
|
|
|
Cost of Goods Sold |
160,000 |
|
80,000 |
|
|
|
Depreciation & Amortization |
25,000 |
|
15,000 |
|
|
|
Other Expenses |
20,000 |
|
10,000 |
|
|
|
Dividends Declared |
60,000 |
|
35,000 |
|
|
|
Accumulated Depreciation |
|
$ 230,000 |
|
$ 60,000 |
|
|
Accounts Payable |
|
60,000 |
|
25,000 |
|
|
Bonds Payable |
|
200,000 |
|
50,000 |
|
|
Common Stock |
|
300,000 |
|
100,000 |
|
|
Retained Earnings |
|
379,600 |
|
140,000 |
|
|
Sales |
|
250,000 |
|
150,000 |
|
|
Income from Subsidiary |
|
38,000 |
|
|
|
|
Total |
$1,457,600 |
$1,457,600 |
$525,000 |
$525,000 |
|