Forte Inc. produces and sells theater set designs and costumes. The company began operations on January 1, 20Y6. The following transactions relate to securities acquired by Forte Inc., which has a fiscal year ending on December 31, 20Y6: Jan. 10. Purchased an influential interest in Imboden Inc. for $720,000 by purchasing 96,000 shares directly from the estate of the founder of Imboden Inc. There are 300,000 shares of Imboden Inc. stock outstanding. Dec. 31. Received $57,600 of cash dividends on Imboden Inc. stock. Imboden Inc. reported net income of $450,000 in 20Y6. Forte Inc. uses the equity method of accounting for its investment in Imboden Inc. Instructions

Forte Inc. produces and sells theater set designs and costumes. The company began operations on January 1, 20Y6. The following transactions relate to securities acquired by Forte Inc., which has a fiscal year ending on December 31, 20Y6: Jan. 10. Purchased an influential interest in Imboden Inc. for $720,000 by purchasing 96,000 shares directly from the estate of the founder of Imboden Inc. There are 300,000 shares of Imboden Inc. stock outstanding. Dec. 31. Received $57,600 of cash dividends on Imboden Inc. stock. Imboden Inc. reported net income of $450,000 in 20Y6. Forte Inc. uses the equity method of accounting for its investment in Imboden Inc. Instructions

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Blue Spruce Corporation purchased 300 common shares of Burke Inc. for $22,830 and accounted for them using FV-OCI. During the year, Burke paid a cash dividend of $3.45 per share. At year end, Burke shares had a fair value of $72.50 per share. (a) Prepare Blue Spruce's journal entry to record the purchase of the investment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit Credit
Fairbanks Corporation purchased 400 ordinary shares of Sherman Inc. as a trading investment for $13,200. During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman shares were selling for $34.50 per share. Prepare Fairbanks' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. assume the shares were purchased to meet a non-trading regulatory requirement. Prepare Fairbanks' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment.
Prepare entries to record both the acquisition and the sale of these shares. 1. On May 20, Montero Company paid $198,000 to acquire 70 shares (5%) of ORD Corporation as a long-term investment. 2. On August 5, Montero sold one-tenth of the ORD shares for $22,000.
On January 1, 2025, Ayayai Corporation purchased 40% of the common shares of Pina Company for $178,000. During the year, Pina earned net income of $86,000 and paid dividends of $21,500. Prepare the entries for Ayayai to record the purchase and any additional entries related to this investment in Pina Company in 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation (To record purchase of stock.) (To record receipt of dividends.) (To record revenue.) Debit Credit ION
Brankov Company purchased common stock in Ramona Company for $400,000. In the current year, Ramona Company reported net income of $50,000 and paid a dividend of $32,000. At the end of the year, the market value of the investment in Ramona Company was $410,000. A) Assume Brankov Company owns 10% of the shares of Ramona Company. Brankov Company considers the investment to be available-for-sale securities. Show the effects of the transactions above on the accounts of Brankov Company using the balance sheet equation. B) Assume Brankov Company owns 25% of the shares of Ramona Company. Show the effects of the transactions above on the accounts of Brankov Company using the balance sheet equation.
On May 12, Year 1, Chewco Co. purchased 2,000 shares of Jedi Inc. for $112 per share, including the brokerage commission. The Jedi investment was classified as an available-for-sale security. On December 31, Year 1, the fair value of Jedi Inc. was $124 per share. The net income of Chewco Co. was $50,000 for Year 1.Compute the comprehensive income for Chewco Co. for the year ended December 31,Year 1.
On May 20, Montero Company paid $180,000 to acquire 55 shares (9%) of ORD Corporation as a long-term investment. On August 5, Montero sold one-tenth of the ORD shares for $20,500. 1. Prepare entries to record both the acquisition and the sale of these shares. 2. Should this stock investment be reported at fair value or at cost on the balance sheet? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare entries to record both the acquisition and the sale of these shares. View transaction list Journal entry worksheet 1 2 > On May 20, Montero Company paid $180,000 to acquire 55 shares (9%) of ORD Corporation as a long-term investment. Note: Enter debits before credits. Date General Journal Debit Credit May 20 Record entry Clear entry View general journal
The following information shows Carperk Company's individual investments in securities during its current year, along with the December 31 fair values. a. Investment in Brava Company bonds: $420,500 cost; $457,000 fair value. Carperk intends to hold these bonds until they mature in 5 years. b. Investment in Baybridge common stock: 29,500 shares; $362,450 cost; $391,375 fair value. Carperk owns 32% of Baybridge's voting stock and has a significant influence over Baybridge. c. Investment in Duffa bonds: $165,500 cost; $178,000 fair value. This investment is not readily marketable and is not classified as held-to-maturity or trading. d. Investment in Newton notes: $90,300 cost; $88,625 fair value. Newton notes are not readily marketable and are not classified as held-to-maturity or trading. e. Investment in Farmers common stock: 16,300 shares; $100,860 cost; $111,210 fair value. This stock is marketable, and Carperk intends to sell it within the year. This stock investment results in…
Clark Company acquired 15% of the 500,000 shares of common stock of Davis Company at a total cost of $25.75 per share on June 1, 2025. On October 1, Davis Company declared and paid a $50,000 cash dividend. On December 31, Davis Company stock had a market price of $27.00 per share and the company reported net income of $1,250,000 for the year. The securities are classified as trading. Prepare all journal entries for 2025. June 1 Oct 1 Dec 31 Use the information above: Assume Clark Company acquired 40% of the shares of Davis Company. June 1 Oct 1 Dec 31
The following information shows Carperk Company’s individual investments in securities during its current year, along with the December 31 fair values. a. Investment in Brava Company bonds: $420,500 cost; $457,000 fair value. Carperk intends to hold these bonds until they mature in 5 years. b. Investment in Baybridge common stock: 29,500 shares; $362,450 cost; $391,375 fair value. Carperk owns 32% of Baybridge’s voting stock and has a significant influence over Baybridge. c. Investment in Duffa bonds: $165,500 cost; $178,000 fair value. This investment is not readily marketable and is not classified as held-to-maturity or trading. d. Investment in Newton notes: $90,300 cost; $88,625 fair value. Newton notes are not readily marketable and are not classified as held-to-maturity or trading. e. Investment in Farmers common stock: 16,300 shares; $100,860 cost; $111,210 fair value. This stock is marketable, and Carperk intends to sell it within the year. This stock investment results in…
Following is a list of investments owned by Martinez Ltd., as of the company’s year-end, December 31, 2020: Investment No. Shares Cost Fair Value HFX Corporation 1,200 $9.00 $8.20 FDY Ltd. 2,100 6.50 6.55 CTN Corporation 3,700 7.00 7.60 On January 15, 2021, Martinez sold the shares in CTN Corporation for $8.10 per share. Prepare the journal entries required to record the sale, assuming the company uses the fair value through other comprehensive income without recycling method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 15, 2021 (To adjust to current fair value) (To record the sale of shares) (Reclassification…
Princeton Company acquired some of the 50,000 outstanding shares of the common stock of CoxCorporation as trading securities. The accounting period for both companies ends December 31.Give the journal entries for each of the following transactions:July 2 Purchased 8,000 shares of Cox common stock at $28 per share.Dec. 15 Cox Corporation declared and paid a cash dividend of $2 per share.31 Determined the fair value of Cox stock to be $29 per share