For the First Quarter of 20X8,Vinyl Corporation Reported Sales of $150,000

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.