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Pizza Company Purchased Salt Company Common Stock Through Open-Market Purchases

Question 2

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Pizza Company purchased Salt Company common stock through open-market purchases as follows: Pizza Company purchased Salt Company common stock through open-market purchases as follows: Salt Company had 12,000 shares of $20 par value common stock outstanding during the entire period.Salt had the following retained earnings balances on the relevant dates: Salt Company declared no dividends in 2012 or 2013 but did declare $60,000 of dividends in 2014.Any difference between cost and book value is assigned to subsidiary land.Pizza uses the equity method to account for its investment in Salt. Required: A.Prepare the journal entries Pizza Company will make during 2013 and 2014 to account for its investment in Salt Company. B.Prepare workpaper eliminating entries necessary to prepare a consolidated statements workpaper on December 31, 2014.
Salt Company had 12,000 shares of $20 par value common stock outstanding during the entire period.Salt had the following retained earnings balances on the relevant dates: Pizza Company purchased Salt Company common stock through open-market purchases as follows: Salt Company had 12,000 shares of $20 par value common stock outstanding during the entire period.Salt had the following retained earnings balances on the relevant dates: Salt Company declared no dividends in 2012 or 2013 but did declare $60,000 of dividends in 2014.Any difference between cost and book value is assigned to subsidiary land.Pizza uses the equity method to account for its investment in Salt. Required: A.Prepare the journal entries Pizza Company will make during 2013 and 2014 to account for its investment in Salt Company. B.Prepare workpaper eliminating entries necessary to prepare a consolidated statements workpaper on December 31, 2014.
Salt Company declared no dividends in 2012 or 2013 but did declare $60,000 of dividends in 2014.Any difference between cost and book value is assigned to subsidiary land.Pizza uses the equity method to account for its investment in Salt.
Required:
A.Prepare the journal entries Pizza Company will make during 2013 and 2014 to account for its investment in Salt Company.
B.Prepare workpaper eliminating entries necessary to prepare a consolidated statements workpaper on December 31, 2014.

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