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Make work paper eliminating entries for a work paper

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On October 1, 2020, Para Company purchased 90% of the outstanding common stock of Star Company for $210,000. Additional data concerning Star Company for 2020 follows:

Common stock $70,000

Other contributed capital $30,000

Retained earnings, 1/1 $70,000

Net income $60,000

Dividends declared and paid (12/15) $ 10,000

  • Any difference between book value and the value implied by the purchase price relates to goodwill. Para Company uses the partial equity method to record its investment in Star Company.

Required:

Question A) Make on Para Company's books journal entries to record the investment-related activities for 2020.

Question b) Make work paper eliminating entries for a work paper on December 31, 2020. Star Company's net income is earned evenly throughout the year.

Reference no: EM132525915

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