On January 1, 2011, Jolley Corp. paid $250,000 for 25% of the voting common stock of Tige Co. On that date, the book value of Tige 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. Tige owned a trademark valued at $90,000 over cost that was to be amortized over 20 years.
During 2011, Tige 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 a transfer price of $33,000. Jolly uses a perpetual inventory system.
Tige reported net income of $200,000 during 2011. This amount included an extraordinary gain of $35,000. Tige paid dividends totaling $40,000.
Required:
Prepare all of Jolley's journal entries for 2011 in relation to Tige Co. Assume the equity method is appropriate for use.
Required journal entries:

Question

On January 1, 2011, Jolley Corp. paid $250,000 for 25% of the voting common stock of Tige Co. On that date, the book value of Tige 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. Tige owned a trademark valued at $90,000 over cost that was to be amortized over 20 years.
During 2011, Tige 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 a transfer price of $33,000. Jolly uses a perpetual inventory system.
Tige reported net income of $200,000 during 2011. This amount included an extraordinary gain of $35,000. Tige paid dividends totaling $40,000.
Required:
Prepare all of Jolley's journal entries for 2011 in relation to Tige Co. Assume the equity method is appropriate for use.  
 Required journal entries:

Quizplus · Accepted Answer

The Answer of On January 1, 2011, Jolley Corp. paid $250,000 for 25% of the voting common stock of Tige Co. On that date, the book value of Tige 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. Tige owned a trademark valued at $90,000 over cost that was to be amortized over 20 years.
During 2011, Tige 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 a transfer price of $33,000. Jolly uses a perpetual inventory system.
Tige reported net income of $200,000 during 2011. This amount included an extraordinary gain of $35,000. Tige paid dividends totaling $40,000.
Required:
Prepare all of Jolley's journal entries for 2011 in relation to Tige Co. Assume the equity method is appropriate for use.  
 Required journal entries: