Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $433,000. At that date, the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheet data.
Assets $700,000 Accounts Payable $100,000
Bonds Payable 200,000
Common Stock 120,000
Retained Earnings 280,000
Total $700,000 Total $700,000
Round reported net income of $80,000 for 20X2 and paid dividends of $25,000.
Required:
a Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using the equity method.
b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements.
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Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2,...
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