Selk Steel Company, which began operations in Year 1, had the following transactions and events in its long-terminvestments.Year 1January 5 Selk purchased 60,000 shares (20% of total) of Kildaire's common stock for $1,560,000.October 23 Kildaire declared and paid a cash dividend of $3.20 per share.December 31 Kildaire's net income for the year is $1,164,000, and the fair value of its stock at December 31 is $30.00per share.Year 2October 15 Kildaire declared and paid a cash dividend of $2.60 per share.December 31 Kildaire's net income for the year is $1,476,000, and the fair value of its stock at December 31 is $32.00per share.Year 3January 2 Selk sold 3% (equal to 1,800 shares) of its investment in Kildaire for $54,200 cash. Required:Prepare journal entries to record these transactions and events for Selk. Assume that Selk has a significant influence over Kildaire withits 20% share of stock.Complete this question by entering your answers in the tabs below.Year 1Year 2Prepare journal entries to record these transactions and events for Selk.View transaction list1Journal entry worksheet2DateJanuary 05Year 33Selk purchased 60,000 shares (20% of total) of Kildaire's common stock for$1,560,000.Note: Enter debits before credits.General JournalDebitCredit>

For accounting purposes, journal entries are prepared to record the day-to-day transactions or…

Answered: Selk Steel Company, which began…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter19: Corporations: Distributions Not In Complete Liquidation

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Problem 1BCRQ

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Felicia Company acquired 21,000 of the 60,000 shares of outstanding common stock of NuecesCorporation as a long-term investment. The annual accounting period for both companies endsDecember 31. The following transactions occurred during the year:Jan. 10 Purchased 21,000 shares of Nueces common stock at $12 per share.Dec. 31 Nueces Corporation reported net income of $90,000.Dec. 31 Nueces Corporation declared and paid a cash dividend of $0.60 per share.Dec. 31 Determined the fair value of Nueces stock to be $11 per share.Required:1. What accounting method should the company use? Why?2. Give the journal entries for each of these transactions. If no entry is required, explain why.3. Show how the long-term investment and the related revenue should be reported on the financial statements of Felicia Company.
Brinkley Company, which began operations in Year 1, had the following transactions and events in its long-term investments. Year 1 Jan. 5 Brinkley purchased 20,000 shares (25% of total) of Bloch’s common stock for $200,500. Aug. 1 Bloch declared and paid a cash dividend of $1.05 per share. Dec. 31 Bloch’s net income for the year is $82,000, and the fair value of its stock is $11.90 per share. Year 2 Aug. 1 Bloch declared and paid a cash dividend of $1.35 per share. Dec. 31 Bloch’s net income for the year is $78,000, and the fair value of its stock is $13.65 per share. Year 3 Jan. 8 Brinkley sold 5% (equal to 1,000 shares) of its investment in Bloch for $12,025 cash. Required Prepare journal entries to record these transactions and events for Brinkley. Assume that Brinkley has a significant influence over Bloch with its 25% share.
Selk Steel Co., which began operations in Year 1, had the following transactions and events in its longterm investments. Year 1 Jan. 5 Selk purchased 60,000 shares (20% of total) of Kildaire’s common stock for $1,560,000. Oct. 23 Kildaire declared and paid a cash dividend of $3.20 per share. Dec. 31 Kildaire’s net income for the year is $1,164,000, and the fair value of its stock at December 31 is $30.00 per share. Year 2 Oct. 15 Kildaire declared and paid a cash dividend of $2.60 per share. Dec. 31 Kildaire’s net income for the year is $1,476,000, and the fair value of its stock at December 31 is $32.00 per share. Year 3 Jan. 2 Selk sold 3% (equal to 1,800 shares) of its investment in Kildaire for $54,200 cash. Required Prepare journal entries to record these transactions and events for Selk. Assume that Selk has a significant influence over Kildaire with its 20% share of stock.
On January 1, Vienna Corporation purchased 40% of the outstanding common stock of the Marietta Corporation for $137,500. During the year, Marietta Corporation reported net income of $50,000 and paid cash dividends of $25,000.The balance of the Investment in the Marietta Corporation account on the books of Vienna Corporation at year-end is: Select one: A. $147,500 B. $135,000 C. $100,000 D. $110,000
Cosmos Corporation had the following long-term investment transactions. Year 1 January 2 Purchased 5,000 shares of Visual, Inc. for $42 per share. October 15 Received Visual, Inc. cash dividend of $2 per share. December 31 Visual reported a net loss of $66,000 for the year. Year 2 February 2 Sold 5% of the shares of Visual Inc for $7000. Prepare the journal entries Cosmos Corporation should record for these transactions and events.
On January 2, Year 1, Barber Company purchased 6,100 shares of Convell Company for $71.720. Convell Company has a total of 30,500 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.85 per share, and its net income was $83,000 and $78,000 for Year 1 and Year 2, respectively. What is the book value of Barber's investment in Convell at the end of Year 2? Multiple Choice S61.350. $102.920.
Aylmer Corp has the following transactions relating to investments. Aylmer Corp has a December 31 year end. 01-Sep-19 Aylmer Corp purchased 3,100 shares of Belmont Inc at $13.00 per share. 31-Oct-19 Belmont Inc paid dividends of $5.00 per share. 31-Dec-19 Belmont Inc shares had a fair value of $12.00 per share. 31-Dec-19 Belmont Inc reported net income of $63,000 for the year. 01-Mar-20 Aylmer Corp sold all of Belmont Inc shares for $17.00 per share. Additional Information: Assume Aylmer Corp uses the fair value through other comprehensive income (FV-OCI) method to account for its investments. Dividend income is required to be recorded in a separate account. REQUIRED: Prepare the appropriate entries for the above transactions.
On January 4, Year 1, Barber Company purchased 13,500 shares of Convell Company for $162,000. Convell Company has a total of 67,500 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.75 per share, and its net income was $123,000 and $118,000 for Year 1 and Year 2 , respectively. The January 2, Year 3, entry to record Barber's sale of 8,100 shares of Convell Company stock, which represents 60% of Barber's total investment, for $109,350 cash, should be: Multiple Choice Debit Cash $109,350; debit Loss on Sale of Stock Investment $9,510; credit Equity Method Investments $99,840. Debit Cash $109,350; credit Gain on Sale of Stock Investment $20,250; credit Equity Method Investments $89,100. Debit Cash $109,350; debit Loss on Sale of Stock Investment $57,050; credit Equity Method Investments $162,000. Debit Cash $109,350; debit Loss on Sale of…
Melville Inc. purchased 2,000 common shares (20%) of Raymore Ltd. on January 1, Year 5 for $42,000. Additional information on Raymore for the two years ending December 31, Year 6, is as follows: Year Net Income Dividends Paid Market Value per Share atend of period Year 5 $ 25,000 $ 13,000 $22.00 Year 6 28,000 14,000 22.60 At December 31, Year 6, Raymore had some inventory that was purchased from Melville. Melville had recorded a gross profit of $1,300 on the sale of this inventory. This gross profit should be deducted from Melville's Year 6 profit and investment account under the equity method. On January 1, Year 7, Melville sold its investment in Raymore for $47,000. Required: (a) Calculate the balance in the investment account at December 31, Year 6 under each of the cost and equity methods. (Omit $ sign in your response.) Investment account at end of Year 6 under cost method $ Investment account at end of Year 6 under equity method $…
Kramer Corporation had the following long-term Investment transactions. Prepare the journal entries Kramer Corporation should record for these transactions and events. Jan 2 Purchased 5,000 shares of Optic, Inc. for $42 per share plus $7,000 in fees and commission. These shares represent a 35% ownership of Optic. Oct 15 Received Optic, Inc. cash dividend of $2 per share. Dec 31 Optic reported a net income of $66,000 for the year.
Listed below are a few events and transactions of Kodax Company. Year 1 January 2 Purchased 72,000 shares of Grecco Company common stock for $566,000 cash. Grecco has 216,000 shares of common stock outstanding, and its activities will be significantly influenced by Kodax. September 1 Grecco declared and paid a cash dividend of $1.10 per share. December 31 Grecco announced that net income for the year is $513,900. Year 2 June 1 Grecco declared and paid a cash dividend of $3.90 per share. December 31 Grecco announced that net income for the year is $745,400. December 31 Kodax sold 12,000 shares of Grecco for $125,000 cash. Prepare journal entries to record the above transactions and events of Kodax Company. Note: Do not round intermediate calculations and round your final answers to the nearest dollar amount. View transaction list Journal entry worksheet 1 2 3 4 5 6 Purchased 72,000 shares of Grecco Company common stock for $566,000 cash. Grecco has 216,000 shares of common stock…
Listed below are a few events and transactions of Kodax Company. Year 1 January 2 Purchased 40,000 shares of Grecco Company common stock for $431,000 cash. Grecco has 120,000 shares of common stock outstanding, and its activities will be significantly influenced by Kodax. September 1 Grecco declared and paid a cash dividend of $1.70 per share. December 31 Grecco announced that net income for the year is $489,900. Year 2 June 1 Grecco declared and paid a cash dividend of $1.70 per share. December 31 Grecco announced that net income for the year is $705,400. December 31 Kodax sold 9,000 shares of Grecco for $160,000 cash. Prepare journal entries to record the above transactions and events of Kodax Company. (Do not round intermediate calculations and round your final answers to the nearest dollar amount.) View transaction list Journal entry worksheet < 1 2 Note: Enter debits before credits. Date September 1, Year 1 3 Cash 4 Grecco declared and paid a cash dividend of $1.70 per share. 5 6…

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