Page Company purchased an 80% interest in the common stock of the Seed Company for $600,000 on January 1, 2019, when Seed Company had the following stockholders' equity:
Common stock, $10 par $300,000
Cumulative preferred stock, 10%, $10 par 100,000
Paid-in capital in excess of par, common 50,000
Retained earnings 200,000
Any excess of cost over book value on the common stock purchase was attributed to goodwill. Page does not hold any of Seed's preferred stock. Seed had net income of $40,000 during 2019 and paid no dividends.
The preferred stock is one year in arrears on January 1, 2019 . The goodwill that will appear on the consolidated balance sheet prepared on January 1, 2019, is ____.
a. $80,000
b. $88,000
c. $210,000
d. $168,000
c
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Under the direct method, each line of the balance sheet is converted to cash paid or received
Indicate whether the statement is true or false.
According to a summary of the payroll of Scotland Company, $450,000 was subject to the 6.0% social security taxand $500,000 was subject to the 1.5% Medicare tax. Federal income tax withheld was $98,000 . Also, $15,000 wassubject to state (4.2%) and federal (0.8%) unemployment taxes. The journal entry to record accrued salaries wouldinclude a
a. debit to Salary Payable of $450,000 b. credit to Salary Payable of $500,000 c. debit to Salary Expense of $500,000 d. credit to Salary Expense of $450,000