Peanut Company acquired 80 percent of Snoopy Company’s outstanding common stock for $260,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equal to $325,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of January 1, 20X8, follow:
| Peanut Company | Snoopy Company | |
|---|---|---|
| Assets | ||
| Cash | $257,000 | $83,000 |
| Accounts Receivable | 200,000 | 88,000 |
| Inventory | 186,000 | 101,000 |
| Investment in Snoopy Company | 310,400 | |
| Land | 209,000 | 83,000 |
| Buildings and Equipment | 713,000 | 192,000 |
| Accumulated Depreciation | (400,000) | (10,000) |
| Total Assets | $1,000,000 | $400,000 |
| Liabilities and Stockholders’ Equity | ||
| Accounts Payable | $75,000 | $25,000 |
| Bonds Payable | 200,000 | 75,000 |
| Common Stock | 500,000 | 200,000 |
| Retained Earnings | 225,000 | 100,000 |
| Total Liabilities and Equity | $1,000,000 | $400,000 |
Required:
a. Prepare the journal entry on Peanut’s books for the acquisition of Snoopy on January 1, 20X8.
b. Prepare a consolidation worksheet on the acquisition date, January 1, 20X8.
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