Prepare in general journal form the workpaper entries

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Reference no: EM131201227

Workpaper Eliminating Entries, Equity Method

At the beginning of 2009, Presidio Company purchased 95% of the common stock of Succo Company for $494,000. On that date, Succo Company"s stockholders" equity consisted of the following:

Common stock

$300,000

Other contributed capital

100,000

Retained earnings

120,000

Total

$520,000

During 2017, Succo Company reported net income of $40,000 and distributed dividends in the amount of $19,000. Succo Company"s retained earnings balance at the end of 2016 amounted to $160,000. Presidio Company uses the equity method.

Required:

Prepare in general journal form the workpaper entries necessary in the compilation of consolidated financial statements on December 31, 2017. Explain why the partial and complete equity methods would result in the same entries in this instance.

Reference no: EM131201227

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