Matthews Co

question 27

Essay

Matthews Co.acquired all of the common stock of Jackson Co.on January 1, 2017.As of that date, Jackson had the following trial balance:
During 2017, Jackson reported net income of $96,000 while paying dividends of $12,000.During 2018, Jackson reported net income of $132,000 while paying dividends of $36,000.
Assume that Matthews Co.acquired the common stock of Jackson Co.for $588,000 in cash.As of January 1, 2017, Jackson's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000.Any excess of consideration transferred over fair value of assets and liabilities acquired is due to an unamortized patent to be amortized over 10 years.
Matthews decided to use the equity method for this investment.
Required:
(A.) Prepare consolidation worksheet entries for December 31, 2017.
(B.) Prepare consolidation worksheet entries for December 31, 2018.

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Definitions:

Raw Materials Inventory

The total cost of all the materials that are used in making a product but have not yet been converted into the finished product.

Control Account

An account used in accounting to summarize and manage detailed information while keeping the general ledger free of clutter.

Expense Account

An account used to track expenses incurred, which are then offset against revenue to determine net profit.

Raw Materials Inventory

The total cost of all the raw materials that are used in production and currently stored by a company.