GAGA Company and Little Bieber Company had the following balance sheets on Janua
ID: 2444845 • Letter: G
Question
GAGA Company and Little Bieber Company had the following balance sheets on January 1, 2015
GAGA
Little Bieber
Cash
2,000,000
40,000
Inventory
1,000,000
90,000
Equipment
2,000,000
500,000
a/d equipment
-1,000,000
-200,000
Total Assets
4,000,000
430,000
accts payable
1,000,000
20,000
Common stock
2,000,000
10,000
retained earnings
1,000,000
400,000
On January 2nd GAGA purchased 80% of Little Bieber from Little Bieber’s stockholders for $750,000. At that time Little Bieber’s equipment was worth $400,000 with all other assets and liabilities having a book value equal to their fair market value.
REQUIRED;
A) MAKE THE JOURNAL ENTRY GAGA MAKES WHEN IT BUYS THE 80% OF LITTLE BIEBER
B) MAKE THE JOURNAL ENTRY LITTLE BIEBER MAKES WHEN 80% OF ITS STOCK IS PURCHASED BY GAGA
C) MAKE A CONSOLIDATED BALANCE SHEET ON JANUARY 2ND (DON’T FORGET GAGA SPENT $750,000 )
a)MAKE THE NECESSARY ELIMINATION ENTRIES
GAGA
Little Bieber
Cash
2,000,000
40,000
Inventory
1,000,000
90,000
Equipment
2,000,000
500,000
a/d equipment
-1,000,000
-200,000
Total Assets
4,000,000
430,000
accts payable
1,000,000
20,000
Common stock
2,000,000
10,000
retained earnings
1,000,000
400,000
Explanation / Answer
A.
B. No entry in books of Little Bieber
C. Consolidated Balance Sheet
Workings
Consolidated Balance Sheet
Dr/Cr Debit Credit Investment in Little Bieber Dr 750000 Cash Cr 750000Related Questions
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