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Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20X1, for $145,000. On that date, the fair value of the noncontrolling interest was $36,250, and Slice reported retained earnings of $42,000 and had $93,000 of common stock outstanding. Pizza has used the equity method in accounting for its investment in Slice. Trial balance data for the two companies on December 31, 20X5, are as follows:
Pizza Corporation
Slice Products Company
Item
Debit
Credit
Debit
Credit
Cash & Receivables
$
83,000
$
79,000
Inventory
274,000
94,000
Land
80,000
80,000
Buildings & Equipment
511,000
162,000
Investment in Slice Products Company
178,020
Cost of Goods Sold
119,000
42,000
Depreciation Expense
22,000
12,000
Inventory Losses
12,000
5,000
Dividends Declared
35,000
23,600
Accumulated Depreciation
$
195,000
$
84,000
Accounts Payable
46,000
19,000
Notes Payable
221,120
112,600
Common Stock
298,000
93,000
Retained Earnings
312,000
83,000
Sales
208,000
106,000
Income from Slice Products Company
33,900
$
1,314,020
$
1,314,020
$
497,600
$
497,600
Additional Information
On the date of combination, the fair value of Slice's depreciable assets was $46,250 more than book value. The accumulated depreciation on these assets was $10,000 on the acquisition date. The differential assigned to depreciable assets should be written off over the following 10-year period.
There was $11,000 of intercorporate receivables and payables at the end of 20X5.
Required: a. Prepare all journal entries that Pizza recorded during 20X5 related to its investment in Slice. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Record Pizza Corporation.'s 80% share of Slice Wood Company's 20X5 income.
Note: Enter debits before credits.
Event
General Journal
Debit
Credit
1
Investment in Slice Products Company
Income from Slice Products Company
Record Pizza Corporation's 80% share of Slice Company's 20X5 dividend.
Note: Enter debits before credits.
Event
General Journal
Debit
Credit
2
Cash
18,880
Investment in Slice Products Company
18,880
Record the amortization of the excess acquisition price.
Note: Enter debits before credits.
Event
General Journal
Debit
Credit
3
Income from Slice Products Company
Investment in Slice Products Company
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