Question

Smith, Inc., has the followingstockholders%u2019 equity accounts as of January 1, 2013:

Preferredstock%u2014$100 par, nonvoting and nonparticipating, 8 percentcumulative dividend	$	2,000,000
Common stock%u2014$20 par value		4,000,000
Retained earnings		10,000,000

Haried Company purchases all ofSmith%u2019s common stock on January 1, 2013, for $14,040,000. Thepreferred stock remains in the hands of outside parties. Any excessacquisition-date fair value will be assigned to franchise contractswith a 40-year life.

During2013, Smith reports earning $450,000 in net income and pays$360,000 in cash dividends. Haried applies the equity method tothis investment.

a.	What is the noncontrollinginterest%u2019s share of consolidated net income for thisperiod?

Net income - non-controlling interest's share

$

b.	What is the balance in theInvestment in Smith account as of December 31, 2013?

Investment in Smith account

$

c.	What consolidation entries areneeded for 2013?

General Journal	Debit	Credit
Entry S and A combined
(Click to select)Equity Income of SubsidiaryDividendsPaidFranchisesInvestment in SmithPreferred Stock(Smith)Amortization ExpenseCommon Stock (Smith)NoncontrollingInterest in Smith, IncRetained Earnings, 1/1/13 (Smith)
(Click to select)Equity Income of SubsidiaryInvestmentin SmithNoncontrolling Interest in Smith, IncRetained Earnings,1/1/13 (Smith)Common Stock (Smith)AmortizationExpenseFranchisesDividends PaidPreferred Stock (Smith)
(Click to select)Preferred Stock (Smith)RetainedEarnings, 1/1/13 (Smith)FranchisesAmortizationExpenseNoncontrolling Interest in Smith, IncDividends PaidCommonStock (Smith)Equity Income of SubsidiaryInvestment in Smith
(Click to select)Dividends PaidPreferred Stock(Smith)Investment in SmithRetained Earnings, 1/1/13(Smith)Noncontrolling Interest in Smith, IncAmortizationExpenseCommon Stock (Smith)FranchisesEquity Income ofSubsidiary
(Click toselect)Amortization ExpenseCommon Stock (Smith)Equity Income ofSubsidiaryInvestment in SmithDividends PaidFranchisesNoncontrollingInterest in Smith, IncRetained Earnings, 1/1/13 (Smith)PreferredStock (Smith)
(Click to select)CommonStock (Smith)Noncontrolling Interest in Smith, IncInvestment inSmithEquity Income of SubsidiaryAmortizationExpenseFranchisesDividends PaidRetained Earnings, 1/1/13(Smith)Preferred Stock (Smith)
Entry I
(Click to select)Preferred Stock (Smith)Investment inSmithCommon Stock (Smith)Equity income of subsidiaryRetainedEarnings, 1/1/13 (Smith)Noncontrolling Interest in Smith,IncDividends PaidFranchisesAmortization Expense
(Click to select)EquityIncome of SubsidiaryDividends PaidRetained Earnings, 1/1/13(Smith)Investment in SmithFranchisesCommon Stock (Smith)PreferredStock (Smith)Noncontrolling Interest in Smith, IncAmortizationExpense
Entry D
(Click to select)Amortization ExpenseEquity Income ofSubsidiaryFranchisesDividends PaidPreferred Stock (Smith)RetainedEarnings, 1/1/13 (Smith)Common Stock (Smith)Noncontrolling Interestin Smith, IncInvestment in Smith
(Click to select)RetainedEarnings, 1/1/13 (Smith)Dividends PaidInvestment inSmithFranchisesEquity Income of SubsidiaryNoncontrolling Interestin Smith, IncAmortization ExpensePreferred Stock (Smith)CommonStock (Smith)
Entry E
(Click to select)Preferred Stock (Smith)NoncontrollingInterest in Smith, IncDividends PaidRetained Earnings, 1/1/13(Smith)Investment in SmithAmortization ExpenseEquity Income ofSubsidiaryCommon Stock (Smith)Franchises
(Click toselect)Preferred Stock (Smith)Common Stock (Smith)Investment inSmithNoncontrolling Interest in Smith, IncDividendsPaidAmortization ExpenseFranchisesEquity Income ofSubsidiaryRetained Earnings, 1/1/13 (Smith)