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Case 5-1
Case 5-1
826315
FRSA (A201)
DR. SYED MOHD NA'IM
Case 5-1
a) Journal entries for Axel Corp ro record the acquisition of Wheal Company stock assuming purchase accouting.
1
Investment in Wheal $ 110,000
Capital Stock - Axel $ 110,000
$ 110,000 $ 110,000
b)Prepare the worksheet entries for Axel Corp. to eliminate the investment in Wheal Company stock in preparation
for a consolidated
balance sheet at December 31, Year 4, assuming (1) pooling accounting and (2) purchase accouting
Inventory $ 25,000
PPE $ 100,000
Secret Formula (Patent) $ 30,000
Goodwill $ 40,000
Long-Term Debt $ 2,000
Account receivable $ 5,000
Accrued employee pensions $ 2,000
Investment in Wheal $ 190,000
$ 197,000 $ 197,000
c) Calculate consolidated retained earnings at December 31, Year 4 (Axel’s retained earnings at this date are
$150,000), assuming
Pooling Purchase
Retained Earning - Axel $ 150,000 $ 150,000
Retained Earning - Wheal $ 35,000
Conslidated Retained Earnings $ 185,000 $ 150,000
ming purchase accouting.
ase accouting
rnings at this date are