Sandy Corporation's stockholders' equity on December 31, 2010 was as follows:
10% cumulative preferred stock, $100 par value,
On January 1, 2011, Bombard Corporation paid $200,000 for a 90% interest in Sandy's common stock.On January 1, 2011, the book values of Sandy's assets and liabilities were equal to fair values.On January 2, 2011, Bombard Corporation paid $120,000 for a 90% interest in Sandy's preferred stock.
Required:
1.Determine the book value of the common stockholders' equity for Sandy Corporation on January 1, 2011.
2.Prepare the journal entry(ies)on January 1, 2011 for Bombard Corporation.
3.Prepare the journal entry(ies)on January 2, 2011 for Bombard Corporation.
4.For the year ending December 31, 2011, Sandy Corporation reported net income of $50,000.Sandy Corporation declared and paid dividends of $20,000 to preferred stockholders and $10,000 to common stockholders.Prepare the journal entries for Bombard Corporation relating to this information.

Question

Sandy Corporation's stockholders' equity on December 31, 2010 was as follows:
10% cumulative preferred stock, $100 par value,
  On January 1, 2011, Bombard Corporation paid $200,000 for a 90% interest in Sandy's common stock.On January 1, 2011, the book values of Sandy's assets and liabilities were equal to fair values.On January 2, 2011, Bombard Corporation paid $120,000 for a 90% interest in Sandy's preferred stock.
Required:
1.Determine the book value of the common stockholders' equity for Sandy Corporation on January 1, 2011.
2.Prepare the journal entry(ies)on January 1, 2011 for Bombard Corporation.
3.Prepare the journal entry(ies)on January 2, 2011 for Bombard Corporation.
4.For the year ending December 31, 2011, Sandy Corporation reported net income of $50,000.Sandy Corporation declared and paid dividends of $20,000 to preferred stockholders and $10,000 to common stockholders.Prepare the journal entries for Bombard Corporation relating to this information.

Quizplus · Accepted Answer

The Answer of Sandy Corporation's stockholders' equity on December 31, 2010 was as follows:
10% cumulative preferred stock, $100 par value,
  On January 1, 2011, Bombard Corporation paid $200,000 for a 90% interest in Sandy's common stock.On January 1, 2011, the book values of Sandy's assets and liabilities were equal to fair values.On January 2, 2011, Bombard Corporation paid $120,000 for a 90% interest in Sandy's preferred stock.
Required:
1.Determine the book value of the common stockholders' equity for Sandy Corporation on January 1, 2011.
2.Prepare the journal entry(ies)on January 1, 2011 for Bombard Corporation.
3.Prepare the journal entry(ies)on January 2, 2011 for Bombard Corporation.
4.For the year ending December 31, 2011, Sandy Corporation reported net income of $50,000.Sandy Corporation declared and paid dividends of $20,000 to preferred stockholders and $10,000 to common stockholders.Prepare the journal entries for Bombard Corporation relating to this information.

Sandy Corporation's Stockholders' Equity on December 31, 2010 Was as Follows