On September 12, 3,000 shares of Denver Company’s common stock are acquired at a price of $40 per share plus a $300 brokerage commission. On October 15, an $0.80-per-share dividend was received on the Denver Company stock. On November 10, 1,600 shares of the Denver Company stock were sold for $36 per share less a $150 brokerage commission. At the end of the accounting period on December 31, the fair value of the remaining 1,400 shares of Denver Company’s stock was $35 per share. Denver Company has 400,000 shares of common stock outstanding. Journalize the entries for the original purchase, dividend, sale, and change in fair value under the fair value method. If an amount box does not require an entry, leave it blank. Sep. 12   Investments-Denver Company Stock Investments-Denver Company Stock     Cash Cash Oct. 15   Cash Cash     Dividend Revenue Dividend Revenue Nov. 10   Cash Cash     Loss on Sale of Investments Loss on Sale of Investments     Investments-Denver Company Stock Investments-Denver Company Stock Dec. 31   Unrealized Loss on Equity Investments Unrealized Loss on Equity Investments     Valuation Allowance for Equity Investments Valuation Allowance for Equity Investments

Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 8E
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Equity investments: Less than 20% ownership

On September 12, 3,000 shares of Denver Company’s common stock are acquired at a price of $40 per share plus a $300 brokerage commission. On October 15, an $0.80-per-share dividend was received on the Denver Company stock. On November 10, 1,600 shares of the Denver Company stock were sold for $36 per share less a $150 brokerage commission. At the end of the accounting period on December 31, the fair value of the remaining 1,400 shares of Denver Company’s stock was $35 per share. Denver Company has 400,000 shares of common stock outstanding.

Journalize the entries for the original purchase, dividend, sale, and change in fair value under the fair value method. If an amount box does not require an entry, leave it blank.

Sep. 12
 
Investments-Denver Company Stock Investments-Denver Company Stock
 
 
Cash Cash
Oct. 15
 
Cash Cash
 
 
Dividend Revenue Dividend Revenue
Nov. 10
 
Cash Cash
 
 
Loss on Sale of Investments Loss on Sale of Investments
 
 
Investments-Denver Company Stock Investments-Denver Company Stock
Dec. 31
 
Unrealized Loss on Equity Investments Unrealized Loss on Equity Investments
 
 
Valuation Allowance for Equity Investments Valuation Allowance for Equity Investments
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