P Company purchased 96,000 shares of the common stock of S Company for $1,200,000 on January 1, 2013, when S's stockholders' equity consisted of $5 par value, Common Stock at $600,000 and Retained Earnings of $800,000. The difference between cost and book value relates to goodwill.
On January 2, 2016, S Company purchased 20,000 of its own shares from noncontrolling interests for cash of $300,000 to be held as treasury stock. S Company's retained earnings had increased to $1,000,000 by January 2, 2016. S Company uses the cost method in regards to its treasury stock and P Company uses the equity method to account for its investment in S Company.
Required:
Prepare all determinable workpaper entries for the preparation of consolidated statements on December 31, 2016.

Question

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The Answer of P Company purchased 96,000 shares of the common stock of S Company for $1,200,000 on January 1, 2013, when S's stockholders' equity consisted of $5 par value, Common Stock at $600,000 and Retained Earnings of $800,000. The difference between cost and book value relates to goodwill.
On January 2, 2016, S Company purchased 20,000 of its own shares from noncontrolling interests for cash of $300,000 to be held as treasury stock. S Company's retained earnings had increased to $1,000,000 by January 2, 2016. S Company uses the cost method in regards to its treasury stock and P Company uses the equity method to account for its investment in S Company.
Required:
Prepare all determinable workpaper entries for the preparation of consolidated statements on December 31, 2016.

P Company Purchased 96,000 Shares of the Common Stock of S