Pratt Company purchased 40,000 shares of Silas Company's common stock for $860,000 on January 1,2016.At that time Silas Company had $500,000 of $10 par value common stock and $300,000 of retained earnings.Silas Company's income earned and increase in retained earnings during 2016 and 2017 were:
Silas Company income is earned evenly throughout the year.
On September 1,2017,Pratt Company sold on the open market,12,000 shares of its Silas Company stock for $460,000.Any difference between cost and book value relates to Silas Company land.Pratt Company uses the cost method to account for its investment in Silas Company.
Required:
A.Compute Pratt Company's reported gain (loss)on the sale.
B.Prepare all consolidated statements workpaper eliminating entries for a workpaper on December 31,2017.

Question

Pratt Company purchased 40,000 shares of Silas Company's common stock for $860,000 on January 1,2016.At that time Silas Company had $500,000 of $10 par value common stock and $300,000 of retained earnings.Silas Company's income earned and increase in retained earnings during 2016 and 2017 were:
  Silas Company income is earned evenly throughout the year.
On September 1,2017,Pratt Company sold on the open market,12,000 shares of its Silas Company stock for $460,000.Any difference between cost and book value relates to Silas Company land.Pratt Company uses the cost method to account for its investment in Silas Company.
Required:
A.Compute Pratt Company's reported gain (loss)on the sale.
B.Prepare all consolidated statements workpaper eliminating entries for a workpaper on December 31,2017.

Quizplus · Accepted Answer

The Answer of Pratt Company purchased 40,000 shares of Silas Company's common stock for $860,000 on January 1,2016.At that time Silas Company had $500,000 of $10 par value common stock and $300,000 of retained earnings.Silas Company's income earned and increase in retained earnings during 2016 and 2017 were:
  Silas Company income is earned evenly throughout the year.
On September 1,2017,Pratt Company sold on the open market,12,000 shares of its Silas Company stock for $460,000.Any difference between cost and book value relates to Silas Company land.Pratt Company uses the cost method to account for its investment in Silas Company.
Required:
A.Compute Pratt Company's reported gain (loss)on the sale.
B.Prepare all consolidated statements workpaper eliminating entries for a workpaper on December 31,2017.

Pratt Company Purchased 40,000 Shares of Silas Company's Common Stock