P Company purchased 90% of the outstanding common stock of S Company on January 1, 2010 . S

| June 9, 2016

Question
10. P Company purchased 90% of the outstanding common stock of S Company on January 1, 2010 . S Company’s stockholders’ equity at various dates was:

1/1/10 1/1/14 12/31/14

Common stock $400,000 $400,000 $400,000

Retained earnings 120,000 380,000 460,000

Total $520,000 $780,000 $860,000

The workpaper entry to establish reciprocity under the cost method in the preparation of a consolidated statements workpaper on December 31, 2014 should include a credit to P Company’s retained earnings of

a. $80,000.

b. $234,000.

c. $260,000.

d. $306,000

Please write down calculation process, thanks

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