Peck Company purchased Sanno Company common stock in a series of open-market cash purchases from 2012 through 2014 as follows: Date Shares Acquired Cost January 1, 2012 1,830 $45,400 January 1, 2013 4,575 94,500 January 1, 2014 10,065 265,716 Sanno Company had 18,300 shares of $20 par value common stock outstanding during the entire period. Retained earnings balances for Sanno Company on relevant dates were January 1, 2012 $19,600 January 1, 2013 (30,600 ) January 1, 2014 83,800 December 31, 2014 170,000 Dividends in the amount of $50,600 were distributed by Sanno Company only in 2014. Any difference between implied and book values is assigned to goodwill. Peck Company uses the cost method to account for its investment in Sanno Company. Collapse question part (a) Prepare the journal entries that Peck Company would record on its books during 2014 to account for its investment in Sanno Company.

Peck Company

Journal Entries:

January 1, 2012:

Debit Investment in Sanno Company $45,400

Credit Cash $45,400

To record the investment in 1,830 shares (or 10%).

January 1, 2013:

Debit Investment in Sanno Company $94,500

Credit Cash $94,500

To record the investment in 4,575 shares (or 25%).

January 1, 2014:

Debit Investment in Sanno Company $265,716

Credit Cash $265,716

To record the investment in 10,065 shares (or 55%).

Explanation:

a) Data and Calculations:

Date                 Shares Acquired       Cost        Percentage

January 1, 2012           1,830          $45,400          10% (1,830/18,300 * 100)

January 1, 2013          4,575            94,500         25% (4,575/18,300 * 100)

January 1, 2014        10,065           265,716         55% (10,065/18,300 * 100)

Total shareholding  16,470         $405,616

Sanno's shares        18,300 at $20 par value

January 1, 2014:

Non-controlling interest = 1,830 (18,300 - 16,470) 10% (1,830/18,300 * 100)

Transaction Analysis:

January 1, 2012: Investment in Sanno Company $45,400 Cash $45,400 for 1,830 shares (or 10%)

January 1, 2013: Investment in Sanno Company $94,500 Cash $94,500 for 4,575 shares (or 25%)

January 1, 2014: Investment in Sanno Company $265,716 Cash $265,716 for 10,065 shares (or 55%)

3rd the reason why is because of management and leadership