Prepare on pioneer company books journal entries

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Reference no: EM13928132

1. On January 1, 2014, Pioneer Company purchased 80% of the common stock of Shipley Company for $600,000. At that time, Shipley's stockholders' equity consisted of the following:

Common stock $220,000
Other contributed capital 90,000
Retained earnings 320,000

During 2014, Shipley distributed a dividend in the amount of $120,000 and at year-end reported a $320,000 net income. Any difference between implied and book value relates to subsidiary goodwill. Pioneer Company uses the equity method to record its investment. No impairment of goodwill is observed in the first year.

Required:

A. Prepare on Pioneer Company's books journal entries to record the investment related activities for 2014.

B. Prepare the workpaper eliminating entries for a workpaper on December 31, 2014.

Reference no: EM13928132

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