On January 2, 2021, Jolley Corp. paid $250,000 for 25% of the voting common stock of Wonder Co. On that date, the book value of Wonder was $850,000. A building with a carrying value of $160,000 was actually worth $220,000. The building had a remaining life of twenty years. Wonder owned a trademark valued at $90,000 over cost that was to be amortized over 20 years.During 2021, Wonder sold to Jolley inventory costing $60,000, at a markup of 50% on cost. At the end of the year, Jolley still owned some of these goods with an intra-entity selling price of $33,000. Jolly uses a perpetual inventory system.Wonder reported net income of $200,000 during 2021. This amount included a gain of $35,000. Wonder paid dividends totaling $40,000.Required:Prepare all of Jolley's journal entries for 2021 in relation to Wonder Co. Assume the equity method is appropriate for use.

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The Answer of On January 2, 2021, Jolley Corp. paid $250,000 for 25% of the voting common stock of Wonder Co. On that date, the book value of Wonder was $850,000. A building with a carrying value of $160,000 was actually worth $220,000. The building had a remaining life of twenty years. Wonder owned a trademark valued at $90,000 over cost that was to be amortized over 20 years.During 2021, Wonder sold to Jolley inventory costing $60,000, at a markup of 50% on cost. At the end of the year, Jolley still owned some of these goods with an intra-entity selling price of $33,000. Jolly uses a perpetual inventory system.Wonder reported net income of $200,000 during 2021. This amount included a gain of $35,000. Wonder paid dividends totaling $40,000.Required:Prepare all of Jolley's journal entries for 2021 in relation to Wonder Co. Assume the equity method is appropriate for use.