Question

I'm struggling with figuring out how to calculate the journal entries. If possible, please show how the journal entries were calculated.

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Pop Soda a. 17,500 Equity Method Entries on Pop Co.'s Books: Investment in Soda Corp Income from Soda Corp. Record Pop Co.'s 70% share of Soda Corp.'s 20X3 income 17,500 10,500 Cash Investment in Soda Corp. Record Pop Co.'s 70% share of Soda Corp.'s 20X3 dividend 10.500 6,300 Income from Soda Corp. Investment in Soda Corp. Record amortization of excess acquisition price 6.300 3,800 Income from Soda Corp Investment in Soda Corp. Eliminate the deferred gross profit from downstream sales in 20X3 3.800 6.300 Investment in Soda Corp. Income from Soda Corp. Reverse of the deferred gross profit from upstream sales in 20X2 6.300 5,600 Income from Soda Corp. Investment in Soda Corp. Eliminate the deferred gross profit from upstream sales in 20X2 5,600 b. Book Value Calculations: NCI Pop Co. Common 30% 70% Stock 70,000 Beginning book value + Net Income - Dividends Ending book value 39,000 7,500 -4,500 42.000 91,000 17.500 -10,500 Retaine Earning S 60.000 25,000 -15,000 70,000 98.000 70,000 Reversal Deferred GP Calculations: Total Pop Co.'s share + NCI's share 2.700 Upstream Reversal Downstream Deferred GP Upstream Deferred GP Total 9,000 -3.800 -8.000 -2,800 6,300 -3.800 -5,600 -3,100 -2.400 300

Basic elimination entry Common stock Retained earnings Income from Soda Corp. NCI in NI of Soda Corp Dividends declared Investment in Soda Corp. NCI in NA of Soda Corp. 70,000 60,000 14,400 7,800 - Common stock balance - Beginning balance in RE - Pop's % of NI - Def. GP + Reversal - NCI share of NI - Def. GP +Reversal 15,000 — 100% of Soda Corp's dividends 94.900 — Net book value - Def. GP +Reversal 42,300 — NCI share of BV - Def. GP + Reversal Excess Value (Differential) Calculations: Beginning balance Changes Ending balance NCI 30% 13.800 -2700 11,100 Pop Co. 70% 32.200 -6300 25.900 Building and Equip 20,000 0 20.000 Patent 28000 - 7000 21,000 Acc Dep -2000 -2000) -4.000 Amortization excess value (differential) reclassification entry: Amortization Expense Depreciation Expense Income from Soda Co NCI in NI of Soda co 7000 2000 6300 2700 20.000 21.000 Excess value (differential) reclassification entry: Bulding and Euqipment Patent Accumulated Depreciation Investment in Soda Corp. NCI in NA of Soda Corp 4,000 25,900 11.100 Optional accumulated depreciation elimination entry Accumulated depreciation Building & equipment 65,000 65,000 Reversal of last year's deferral: Investment in Soda Corp NCI in NA of Soda Corp. Cost of Goods Sold 6,300 2.700 9,000 Investment in Soda Corp. NCI in NA of Soda Corp. Inventory 4,900 2.100 7,000 120.000 Deferral of this year's unrealized profits on inventory transfers Sales Cost of Goods Sold Inventory 108,200 11.800

20X3 Downstream Transactions + Sales COGS Gross Profit Gross Profit % Total 30,000 15,000 15,000 50.00% Re-sold 22,400 11,200 11,200 Ending Inventory 7,600 3.800 3,800 20X2 Upstream Transactions Sales COGS Gross Profit Gross Profit % Total 48,000 32,000 16.000 33.33% Re-sold 27,000 18,000 9,000 Ending Inventory 21,000 14.000 7,000 20X3 Upstream Transactions + Sales COGS Gross Profit Gross Profit % Total 90.000 60.000 30,000 33.33% Re-sold 66,000 44.000 22,000 Ending Inventory 24,000 16,000 8,000 c. Pop Co. Soda Corp. Elimination Entries DR CR Consolidated 125,000 120,000 Income Statement Sales Other Income Less: COGS 260,000 13,600 -186,000 265,000 13,600 -148,600 -79,800 108,200 9,000 -20,000 -15,000 2000 7000 -5.200 Less: Depreciation Expense Less: Amortization Expense Less: Interest Expense Income from Soda Corp Consolidated Net Income NCI in Net Income ConSodaing Interest in Net Income -16.000 8.100 59,700 14,400 143,400 7,800 151,200 25,000 -37,000 -7,000 -21,200 0 64,800 -5.100 59,700 6300 123,500 2700 126,200 59,700 25,000 Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance 60,000 151,200 127.900 59,700 -30,000 157,600 60.000 25,000 -15,000 70,000 126,200 15,000 141,200 127.900 59.700 -30,000 157,600 211,200

Balance Sheet Cash and Accounts Receivable Inventory 15,400 165,000 21,600 35,000 37,000 181,200 11,800 7,000 Land Buildings & Equipment Less: Accumulated Depreciation Investment in Soda Corp 80.000 340,000 -140.000 109,600 40,000 260,000 -80,000 120,000 555,000 -159,000 0 20000 65,000 6,300 4,900 21,000 117,200 65,000 4,000 25,900 94,900 Patent Total Assets 21,000 755,200 570,000 276,600 208,600 92,400 200.000 Accounts Payable Bonds Payable Bonds Premium Common Stock Retained Earnings NCI in NA of Soda Corp. 35,000 100,000 1,600 70,000 70,000 $ 127,400 300,000 1,600 120,000 157,600 48.600 120,000 157,600 70,000 211,200 2,700 2,100 286,000 141,200 42,300 11,100 194,600 Total Liabilities & Equity 570,000 276,600 755,200