Consolidated Worksheet at End of the Second Year of Ownership (Cost Method)

Consolidated Worksheet at End of the Second Year of Ownership (Cost Method)

Peanut Company acquired 100 percent of Snoopy Company’s outstanding common stock for $300,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equal to $300,000.

Problem 2-27 summarizes the first year of Peanut’s ownership of Snoopy. Peanut uses the cost method to account for investments. The following trial balance summarizes the financial position and operations for Peanut and Snoopy as of December 31, 20X9:

	Peanut Company			Snoopy Company
	Debit	Credit	Debit		Credit
Cash	$ 230,000		$ 75,000
Accounts Receivable	190,000		80,000
Inventory	180,000		100,000
Investment in Snoopy Stock	300,000		0
Land	200,000		100,000
Buildings & Equipment	700,000		200,000
Cost of Goods Sold	270,000		150,000
Depreciation Expense	50,000		10,000
Selling & Administrative Expense	230,000		60,000
Dividends Declared	225,000		30,000
Accumulated Depreciation		$ 500,000			$ 30,000
Accounts Payable		75,000			35,000
Bonds Payable		150,000			85,000
Common Stock		500,000			200,000
Retained Earnings		470,000			155,000
Sales		850,000			300,000
Dividend Income		30,000			0
Total	$2,575,000	$2,575,000	$805,000		$805,000

Required

a. Prepare any cost method journal entry(ies) related to the investment in Snoopy Company during 20X9.

b. Prepare a consolidation worksheet for 20X9 in good form.

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