For the First Quarter of 20X8, Vinyl Corporation Reported Sales

Essay

For the first quarter of 20X8, Vinyl Corporation reported sales of $150,000 and operating expenses of $100,000, and paid dividends of $20,000. Vinyl Company operates on a calendar-year basis. On April 1, 20X8, Signature Corporation acquired 80 percent of Vinyl's common stock for $320,000. At that date, the fair value of the noncontrolling interest was $80,000, and Vinyl had 20,000 shares of $5 par common stock outstanding, originally issued at $12 per share. The differential is related to goodwill. On December 31, 20X8, the management of Signature Corporation reviewed the amount attributed to goodwill as a result of its acquisition of Vinyl common stock and concluded that goodwill was not impaired. Vinyl's retained earnings statement for the full year 20X8 appears as follows:
Signature uses the fully adjusted equity method in accounting for this investment:
Required:
1) Prepare all entries that Signature would have recorded in accounting for its investment in Vinyl during 20X8.
2) Present all eliminating entries needed in a worksheet to prepare a complete set of consolidated financial statements for the year 20X8.