On 7/1/06, PDQ acquired 80% of Sprint's outstanding common stock by issuing 8,000 shares of its $5 par value common stock (which was trading at $60 per share on that date). In addition, PDQ incurred direct costs of $100,000 relating to the acquisition, $60,000 of which was for the registration of the shares issued with the SEC. Selected relevant data follow:
Additional Information:
Additional Information:
a. The non-push-down basis of accounting was selected.
b. The equity method of accounting is to be used.
c. During 2006, PDQ declared and paid $80,000 of dividends each quarter. Also, PDQ reported a net income of $200,000 for the 6 months ended 6/30/06.
d. For 2006, Sprint had the following earnings and dividends:
Required:
a. Prepare the entry to record the business combination on 7/1/06.
b. Complete the PDQ and Sprint Company columns of the following consolidation worksheet.
c. Prepare all the consolidation entries.
d. Post the consolidation entries in Requirement c to the consolidation worksheet and complete the worksheet.

Question

On 7/1/06, PDQ acquired 80% of Sprint's outstanding common stock by issuing 8,000 shares of its $5 par value common stock (which was trading at $60 per share on that date). In addition, PDQ incurred direct costs of $100,000 relating to the acquisition, $60,000 of which was for the registration of the shares issued with the SEC. Selected relevant data follow:
  Additional Information:
Additional Information:
a. The non-push-down basis of accounting was selected.
b. The equity method of accounting is to be used.
c. During 2006, PDQ declared and paid $80,000 of dividends each quarter. Also, PDQ reported a net income of $200,000 for the 6 months ended 6/30/06.
d. For 2006, Sprint had the following earnings and dividends:
  Required:
a. Prepare the entry to record the business combination on 7/1/06.
b. Complete the PDQ and Sprint Company columns of the following consolidation worksheet.
c. Prepare all the consolidation entries.
d. Post the consolidation entries in Requirement c to the consolidation worksheet and complete the worksheet.

Quizplus · Accepted Answer

The Answer of On 7/1/06, PDQ acquired 80% of Sprint's outstanding common stock by issuing 8,000 shares of its $5 par value common stock (which was trading at $60 per share on that date). In addition, PDQ incurred direct costs of $100,000 relating to the acquisition, $60,000 of which was for the registration of the shares issued with the SEC. Selected relevant data follow:
  Additional Information:
Additional Information:
a. The non-push-down basis of accounting was selected.
b. The equity method of accounting is to be used.
c. During 2006, PDQ declared and paid $80,000 of dividends each quarter. Also, PDQ reported a net income of $200,000 for the 6 months ended 6/30/06.
d. For 2006, Sprint had the following earnings and dividends:
  Required:
a. Prepare the entry to record the business combination on 7/1/06.
b. Complete the PDQ and Sprint Company columns of the following consolidation worksheet.
c. Prepare all the consolidation entries.
d. Post the consolidation entries in Requirement c to the consolidation worksheet and complete the worksheet.

On 7/1/06, PDQ Acquired 80% of Sprint's Outstanding Common Stock