Scribd
Upload
214 views4 pages

Case 5-1

1) Axel Corp recorded the acquisition of Wheal Company stock in two journal entries, first for $110,000 and then for an additional $350,000. 2) The worksheet entries to eliminate the investment in Wheal Company stock under pooling accounting removed the capital stock and other capital of Wheal Company. Under purchase accounting, the entries removed the investment and allocated it to Wheal Company's assets and liabilities. 3) Calculating consolidated retained earnings at December 31, Year 4, the amount was $185,000 under pooling accounting as it included Wheal Company's retained earnings, but only $150,000 under purchase accounting which did not include Wheal's retained earnings.

Uploaded by

fitri
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
214 views4 pages

Case 5-1

1) Axel Corp recorded the acquisition of Wheal Company stock in two journal entries, first for $110,000 and then for an additional $350,000. 2) The worksheet entries to eliminate the investment in Wheal Company stock under pooling accounting removed the capital stock and other capital of Wheal Company. Under purchase accounting, the entries removed the investment and allocated it to Wheal Company's assets and liabilities. 3) Calculating consolidated retained earnings at December 31, Year 4, the amount was $185,000 under pooling accounting as it included Wheal Company's retained earnings, but only $150,000 under purchase accounting which did not include Wheal's retained earnings.

Uploaded by

fitri
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 4

MUHAMAD FITRI BIN SHAHIRAN

826315
FRSA (A201)
DR. SYED MOHD NA'IM

Case 5-1
a) Journal entries for Axel Corp ro record the acquisition of Wheal Company stock assuming purchase accouting.

1
Investment in Wheal $ 110,000
Capital Stock - Axel $ 110,000
$ 110,000 $ 110,000

2 Investment in Wheal $ 350,000


Capital Stock-Axel $ 110,000
Other Capital-Axel $ 240,000
$ 350,000 $ 350,000

b)Prepare the worksheet entries for Axel Corp. to eliminate the investment in Wheal Company stock in preparation
for a consolidated
balance sheet at December 31, Year 4, assuming (1) pooling accounting and (2) purchase accouting

1) Pooling worksheet Entries

Capital Stock-Wheal $ 100,000


Other Capital - Wheal $ 10,000
Invetment in Wheal $ 110,000
$ 110,000 $ 110,000

2) Purchase worksheet Entries

Inventory $ 25,000
PPE $ 100,000
Secret Formula (Patent) $ 30,000
Goodwill $ 40,000
Long-Term Debt $ 2,000
Account receivable $ 5,000
Accrued employee pensions $ 2,000
Investment in Wheal $ 190,000
$ 197,000 $ 197,000

Capital Stock-Wheal $ 100,000


Other Capital - Wheal $ 25,000
Retained Earnings - Wheal $ 35,000
Investment in Wheal $ 160,000
$ 160,000 $ 160,000

c) Calculate consolidated retained earnings at December 31, Year 4 (Axel’s retained earnings at this date are
$150,000), assuming

Consolidated Retained Earnings at Dec. 31, Year 4

Pooling Purchase
Retained Earning - Axel $ 150,000 $ 150,000
Retained Earning - Wheal $ 35,000
Conslidated Retained Earnings $ 185,000 $ 150,000
ming purchase accouting.

mpany stock in preparation

ase accouting
rnings at this date are

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy