Question 2. (50 points) Practice Company acquired 100 percent of Scarlet Company's outstanding common stock for $42,000

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Question 2 50 Points Practice Company Acquired 100 Percent Of Scarlet Company S Outstanding Common Stock For 42 000 1 (65.46 KiB) Viewed 8 times

Question 2. (50 points) Practice Company acquired 100 percent of Scarlet Company's outstanding common stock for $42,000 on January 1, 2021, equals to the book value of Scarlet's net assets. Practice uses equity method for investments. Adjusted trial balance data for Practice and Scarlet as of December 31, 2021, are as follows: Cash Accounts Receivable Inventory Investment in Scarlet Land Buildings and equipment Cost of Goods Sold Depreciation Expense Selling and Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Scarlet Total Practice Company DR CR $12,200 22,000 17,500 48,800 25,000 87,500 25,000 6,500 28,000 7,000 $279,500 $56,000 8,700 35,000 62,500 28,000 80,000 9,300 $279,500 Scarlet Company DR CR c) Prepare basic consolidation entry as of December 31, 2021 (20 points). d) Prepare accumulated depreciation consolidation entry (6 points). $6,200 13,500 14,000 11,500 25,000 15,200 1,500 5,000 2,500 $94,400 $94,400 a) Prepare the journal entries on Practice's books for the acquisition of Scarlet on January 1, 2021 and entries related to the investment in Scarlet Company during 2021 (18 points). b) Prepare Book Value calculation table (6 points) $6,500 6,400 8,500 29,000 13,000 31,000