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Yuda Fadhil - Tugas 2

The document provides information about a company named Presidio that purchased 95% of common stock in Succo Company for $494,000 in 2014. It details Succo's equity accounts as of the purchase date and its net income and dividends for 2021. Presidio uses the equity method to account for its investment in Succo. The required task is to prepare journal entries to record Presidio's share of Succo's 2021 net income of $40,000, dividends of $19,000, and ending retained earnings of $160,000 under the equity method. It notes that the partial and complete equity methods would result in the same entries for this case.

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Yuda Fadhil Cuy
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350 views1 page

Yuda Fadhil - Tugas 2

The document provides information about a company named Presidio that purchased 95% of common stock in Succo Company for $494,000 in 2014. It details Succo's equity accounts as of the purchase date and its net income and dividends for 2021. Presidio uses the equity method to account for its investment in Succo. The required task is to prepare journal entries to record Presidio's share of Succo's 2021 net income of $40,000, dividends of $19,000, and ending retained earnings of $160,000 under the equity method. It notes that the partial and complete equity methods would result in the same entries for this case.

Uploaded by

Yuda Fadhil Cuy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Nama : yuda fadhil Mahfudz

NIM :2201803996
Class : LC53
Advance accounting

EXERCISE 4‐3
Workpaper Eliminating Entries, Equity Method LO 5
At the beginning of 2014, Presidio Company purchased 95% of the common stock of Succo
Company for $494,000. On that date, Succo Company's stockholders' equity consisted of
the following:

Common stok $300,000


Other contributed Capital 100,000
Retained earnings 120,000
Total $520,000
During 2022, Succo Company reported net income of $40,000 and distributed dividends in
the amount of $19,000. Succo Company's retained earnings balance at the end of 2021
amounted to $160,000. Presidio Company uses the equity method.

Required:
Prepare in general journal form the workpaper entries necessary in the compilation of
consolidated financial statements on December 31, 2022. Explain why the partial and
complete equity methods would result in the same entries in this instance.

ANSWER

Jurnal entry

Equity Income ($40,000 x 95%) $38,000

Investment in Succo Company $38,000

Investment in Succo Company ($19,000 x 95%) $18,050

Dividend Declared $18,050

Common Stock $300,000

Other Contributed Capital $100,000

Retained Earning (1/1/21) $160,000

Investment (($494,000 + (.95 x ($160,000 – $120,000)) $532,000

Non Control Intertest (($520,000 x .05 + (.05 x ($160,000 - $120,000)) $28,000

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