On January 2 2013 Pullen Company purchased on the

open #6366
On January 2, 2013, Pullen Company purchased, on the open market, 135,000 shares of Souza
Company common stock for $665,000. At that time, Souza Company had common stock ($2
par value) of $300,000 and retained earnings of $400,000. On May 1, 2014, Pullen Company
sold 13,500 of its Souza Company shares on the open market for $91,000. Changes in Souza
Company retained earnings during 2014 follow:Retained Earnings 1/1/14
...............................................$500,000Net Income for 2014 (earned evenly throughout the year)
.........270,000Dividends Declared on 11/1/14 and paid on 12/16/14 ..............(70,000)Retained
Earnings, 12/31/14 ..........................................$700,000Pullen Company, which uses the cost
method to record its investment in Souza Company, reported net income for 2014 amounting to
$352,500. Any difference between implied and book values relates to subsidiary
land.Required:A. Prepare the book entries Pullen Company will make during 2014 to account
for its investment in Souza Company.B. Prepare, in general journal form, the eliminating entries
needed to prepare a consolidated statements work paper on December 31, 2014.C. Compute
controlling interest in consolidated net income for 2014.D. Prepare the work paper entry to
establish reciprocity for the 2015 consolidated statements work paperView Solution:
On January 2 2013 Pullen Company purchased on the open

ANSWER
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