Poole made the following purchases of Smarte Company common stock: Stockholders' equity information for Smarte Company for 2016 and 2017 follows: On July 1, 2017, Poole sold 14,000 shares of Smarte Company common stock on the open market for $22 per share. The shares sold were purchased on January 1, 2016. Smarte notified Poole that its net income for the first six months was $70,000. Any difference between cost and book value relates to subsidiary land. Poole uses the cost method to account for its investment in Smarte Company.
Required:
A. Prepare the journal entry made by Poole to record the sale of the 14,000 shares on July 1, 2017.
B. Prepare the workpaper eliminating entries needed for a consolidated statements workpaper on December 31, 2017.
C. Compute the amount of noncontrolling interest that would be reported on the consolidated balance sheet on December 31, 2017.

Question

Poole made the following purchases of Smarte Company common stock:  Stockholders' equity information for Smarte Company for 2016 and 2017 follows:  On July 1, 2017, Poole sold 14,000 shares of Smarte Company common stock on the open market for $22 per share. The shares sold were purchased on January 1, 2016. Smarte notified Poole that its net income for the first six months was $70,000. Any difference between cost and book value relates to subsidiary land. Poole uses the cost method to account for its investment in Smarte Company.
Required:
A. Prepare the journal entry made by Poole to record the sale of the 14,000 shares on July 1, 2017.
B. Prepare the workpaper eliminating entries needed for a consolidated statements workpaper on December 31, 2017.
C. Compute the amount of noncontrolling interest that would be reported on the consolidated balance sheet on December 31, 2017.

Quizplus · Accepted Answer

The Answer of Poole made the following purchases of Smarte Company common stock:  Stockholders' equity information for Smarte Company for 2016 and 2017 follows:  On July 1, 2017, Poole sold 14,000 shares of Smarte Company common stock on the open market for $22 per share. The shares sold were purchased on January 1, 2016. Smarte notified Poole that its net income for the first six months was $70,000. Any difference between cost and book value relates to subsidiary land. Poole uses the cost method to account for its investment in Smarte Company.
Required:
A. Prepare the journal entry made by Poole to record the sale of the 14,000 shares on July 1, 2017.
B. Prepare the workpaper eliminating entries needed for a consolidated statements workpaper on December 31, 2017.
C. Compute the amount of noncontrolling interest that would be reported on the consolidated balance sheet on December 31, 2017.

Poole Made the Following Purchases of Smarte Company Common Stock