hi i need help with this questions with the last 3 questions

Adams, Inc., acquires Clay...

Question

hi i need help with this questions with the last 3 questions
 
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $732,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $604,900. Credit balances are indicated by parentheses.

Adams
 
Clay

Current assets
$
326,000
 
$
290,000

Investment in Clay
 
732,300
 
 
0

Equipment
 
781,900
 
 
526,000

Liabilities
 
(280,000
)
 
(170,000
)

Common stock
 
(350,000
)
 
(150,000
)

Retained earnings, 1/1/20
 
(1,210,200
)
 
(496,000
)

In 2020, Clay earns a net income of $62,700 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $193,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows:

Adams
Clay

Revenues
$
(452,000
)
$
(272,000
)

Expenses
 
327,700
 
 
204,000

Investment income
 
Not given
 
 
0

Retained earnings, 1/1/21
 
Not given
 
 
(553,700
)

Dividends declared
 
0
 
 
8,000

Common stock
 
(350,000
)
 
(150,000
)

Current assets
 
651,000
 
 
342,800

Investment in Clay
 
Not given
 
 
0

Equipment
 
701,900
 
 
574,900

Liabilities
 
(208,900
)
 
(130,700
)

What are the December 31, 2021, Investment Income and Investment in Clay account balances assuming Adams uses the:

Equity method.
Initial value method.

What is the amount of Consolidated Expenses in its December 31, 2021, consolidated income statement under each of the following methods?

What is the amount of Consolidated Equipment in its December 31, 2021, consolidated balance sheet under each of the following methods?

What is Adams’s January 1, 2021, Retained Earnings account balance assuming Adams accounts for its investment in Clay using the:

Equity value method.
Initial value method.

What worksheet adjustment to Adams’s January 1, 2021, Retained Earnings account balance is required if Adams accounts for its investment in Clay using the initial value method?

Prepare the worksheet entry to eliminate Clay’s stockholders’ equity.

What is consolidated net income for 2021?

Sandeep · Accepted Answer

AAns 1
	Ans 1	Date 	Accounts 	Debit	Credit
		1/1/20	Investment in Clay	41,920.00
			Retained Earning  on 01/01/20 (Adams)		41,920.00
			(Being  Reecord of adjustment in RE for recording RE 
			as per Equity Method)
		Calcuklation of Retained Earnings as on 01/01/2020
			Equity Method
			Retaineds Earning of Adam's as on 01/01/2020	1,210,200.00
		Adds 	Net Income of Adams	193,000.00
		Adds 	Net Income of Clay	62,

hi i need help with this questions with the last 3 questions Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $732,300 cash. Immediately after the acquisition, the two...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment

	Adams		Clay
Current assets	$	326,000		$	290,000
Investment in Clay		732,300			0
Equipment		781,900			526,000
Liabilities		(280,000	)		(170,000	)
Common stock		(350,000	)		(150,000	)
Retained earnings, 1/1/20		(1,210,200	)		(496,000	)

	Adams	Clay
Revenues	$	(452,000	)	$	(272,000	)
Expenses		327,700			204,000
Investment income		Not given			0
Retained earnings, 1/1/21		Not given			(553,700	)
Dividends declared		0			8,000
Common stock		(350,000	)		(150,000	)
Current assets		651,000			342,800
Investment in Clay		Not given			0
Equipment		701,900			574,900
Liabilities		(208,900	)		(130,700	)