Question

Peanut Company acquired 100 percent of Snoopy Company’s outstanding common stock for $313,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equal to $313,000. Peanut chooses to carry the investment in Snoopy at cost because the investment will be consolidated. Trial balance data for Peanut and Snoopy as of December 31, 20X8, are as follows:

	Peanut Company							Snoopy Company
	Debit			Credit				Debit			Credit
Cash	$	233,000						$	80,000
Accounts Receivable		191,000							82,000
Inventory		197,000							89,000
Investment in Snoopy Company		313,000							0
Land		203,000							89,000
Buildings & Equipment		713,000							183,000
Cost of Goods Sold		279,000							138,000
Depreciation Expense		52,000							16,000
Selling & Administrative Expense		234,000							48,000
Dividends Declared		107,000							22,000
Accumulated Depreciation				$	444,000						$	32,000
Accounts Payable					70,000							55,000
Bonds Payable					198,000							96,000
Common Stock					484,000							215,000
Retained Earnings					511,000							98,000
Sales					793,000							251,000
Dividend Income					22,000							0
Total	$	2,522,000		$	2,522,000			$	747,000		$	747,000

  
(Assume the company prepares the optional Accumulated Depreciation Elimination Entry.)

Required:
a. Prepare the journal entries on Peanut’s books for the acquisition of Snoopy on January 1, 20X8, as well as any other entries related to the investment in Snoopy Company during 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Particulars	Debit	Credit
Investment in snoopy	313000
Common stock		313000
( Being investment acquired)
Cash	22000
Investment in snoopy		22000
( Being dividend received from snoopy )