Lake Company reported the following summarized balance sheet data as of December

Question

Lake Company reported the following summarized balance sheet data as of December 31, 20x2 Cash Accounts Receivable s 37.000 Accounts Payable 90,000 Common Stock 98,000 Retained Earnings s 43.000 150.000 184.000 Buildings & Equipment Less: Accumulated Depreciation (130.000) 282,000 Total Assets 377,000 Total Liabilities & Equities $ 377.000 Lake issues 4.100 additional shares of its $10 par value stock to its shareholders as a stock dividend on April 20. 20X3. The market price of Lake's shares at the time of the stock dividend is $55. Lake reports net income of $26.000 and pays a $14,000 cash dividend in 20X3. Lindale Company aoquired 70 percent of e's common shares at book value on January 1, 20X1. At that date the fair value of the noncontrolling interest was equal to 30 percent of Lake's book value. Lindale uses the equity method in accounting for its investment in Lake Lak Required: a. Prepare the journal entries recorded by Lake and Lindale at the time the stock dividend is declared and distributed. (If no entry is required for a transaction/event first account field.) select "No journal entry required" in the Journal entry worksheet Record the issuance of a stock dividend by Lake Company, Recond entry Clear entry View general

Explanation / Answer

a) Journal Entries Lake company Stock dividends Declared 41000 to common stock 41000 Lindale company = no entry required b) calculation of Book value Particulars NCI 30% + Lindale co70% = common stock    + Retained earning original book value 100200 233800 150000 184000 Add: net income 7800 18200 26000 less: dividends 4200 9800 -14000 less: stock dividend 41000 -41000 ending book value 103800 242200 109000 155000 common stock 191000 retained earning 184000 income from lake co 18200 NCI in NI of lake co 7800 devidend declared 14000 stock dividends declared 41000 investment in lake co 242200 NCI IN NA of lake co 103800 C) Calculation of Book value Particulars NCI 30% + Lindale co70% = common stock    + Retained earning Original books value 103800 242200 191000 155000 total 103800 242200 191000 155000 Common stock 191000 retained earning 155000 investment in lake co 242200 NCIIN NA OF LAKE CO 103800

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