Capital Corporation purchased 100 percent of Cook Company's stock on January 1, 20X4, for $340,000. On...

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Accounting

Capital Corporation purchased 100 percent of Cook Company'sstock on January 1, 20X4, for $340,000. On that date, Cook reportednet assets with a historical cost of $300,000 and a fair value of$340,000. The difference was due to the increased value ofbuildings with a remaining life of 10 years. During 20X4 and 20X5Cook reported net income of $10,000 and $20,000 and paid dividendsof $6,000 and $9,000, respectively.
(b)
Assuming that Capital Corporation uses the cost method inaccounting for its ownership of Cook Company. Prepare the journalentries that Capital recorded in 20X4 and 20X5. (If noentry is required for a transaction/event, select "No journal entryrequired" in the first account field.)
(a)
Assuming that Capital Corporation uses the equity method inaccounting for its ownership of Cook Company. Prepare the journalentries that Capital recorded in 20X4 and 20X5. (If noentry is required for a transaction/event, select "No journal entryrequired" in the first account field.)

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Journal entries recorded by capital corp using equity method Date Particulars Debit Credit 20X4 Investment in cook co stock 34000000 cash 34000000 to record purchase Cash 600000 See Answer

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