Purchase Solution

# Consolidated Net Income - Journal Entries

Not what you're looking for?

2. On January 1, 2003, Musial Corp. sold equipment to Martin Inc. (a wholly-owned subsidiary) for \$168,000 in cash. The equipment had originally cost \$140,000 but had a book value of only \$98,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense was calculated using the straight-line method.

Musial earned \$308,000 in net income in 2003 (not including any investment income) while Martin reported \$126,000. Assume there is no amortization related to the original investment.

Required:
What is consolidated net income for 2003?

3. A U.S. company executed a series of transactions in a foreign country during 2004. The appropriate exchange rates during 2004 were as follows:

Exchange
Date Rate
June 1, 2004 \$.62 = §1
August 1, 2004 \$.66 = §1
October 1, 2004 \$.72 = §1
November 1, 2004 \$.77 = §1
December 31, 2004 \$.78 = §1

The following transactions occurred during 2004:

June 1 Bought inventory of §20,000 on credit.
Aug. 1 Sold all inventory for §30,000 on credit.
Oct. 1 Paid §10,000 on the June 1 purchase.
Nov. 1 Collected §10,000 from the August 1 sale.

Required:
Prepare all journal entries in U.S. dollars along with any December 31, 2004 adjusting entries.

##### Solution Summary

On January 1, 2003, Musial Corp. sold equipment to Martin Inc. (a wholly-owned subsidiary) for \$168,000 in cash. The equipment had originally cost \$140,000 but had a book value of only \$98,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense was calculated using the straight-line method.

##### Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

##### Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

##### Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

##### Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

##### Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.