Problem
On January 1, 20X9, Peery Company acquired 100 percent of Standard Company's common shares at underlying book value. Peery uses the equity method in accounting for its ownership of Standard. On December 31, 20X9, the trial balances of the two companies are as follows:
|
Item
|
Peery Company
|
Standard Company
|
|
|
|
Debit
|
Credit
|
Debit
|
Credit
|
|
|
Current Assets
|
$ 238,000
|
|
$ 95,000
|
|
|
Depreciable Assets
|
300,000
|
|
170,000
|
|
|
Investment in Standard Company
|
100,000
|
|
|
|
|
Other Expenses
|
90,000
|
|
70,000
|
|
|
Depreciation Expense
|
30,000
|
|
17,000
|
|
|
Dividends Declared
|
32,000
|
|
10,000
|
|
|
Accumulated Depreciation
|
|
$ 120,000
|
|
$ 85,000
|
|
Current Liabilities
|
|
50,000
|
|
30,000
|
|
Long-Term Debt
|
|
120,000
|
|
50,000
|
|
Common Stock
|
|
100,000
|
|
50,000
|
|
Retained Earnings
|
|
175,000
|
|
35,000
|
|
Sales
|
|
200,000
|
|
112,000
|
|
Income from Standard Company
|
|
25,000
|
|
|
|
|
$ 790,000
|
$ 790,000
|
$ 362,000
|
$ 362,000
|
Task
A. Record equity method journal entries that were recorded by Peery Company during 20X9
B. Prepare the consolidation entries needed as of December 31, 20X9.
C. Prepare three-part consolidation worksheet (with income Statements, Statements of Retained Earnings and Balance Sheet of both companies) as of December 31, 20X9.