2019 Sep. 9 Purchased 1,000 shares of Packard common stock for $80,000 cash. These shares represent 30% of Packard's outstanding shares. Oct. 2 Purchased 2,000 shares of AT&T common stock for $60,000 cash as a long-term investment. These shares represent less than a 1% ownership in AT&T. 17 Purchased as a long-term investment 1,000 shares of Apple common stock for $40,000 cash. These shares are less than 1% of Apple's outstanding shares. Nov. 1 Received $5,000 cash dividend from Packard. 30 Received $3,000 cash dividend from AT&T. Dec. 15 Received $1,400 cash dividend from Apple. 31 Packard's net income for this year is $70,000. [continued on next page] 31 Fair values for the investments in equity securities are Packard, $84,000; AT&T, $48,000; and Apple, $45,000. 31 For preparing financial statements, note the following post-closing account balances: Common Stock, $500,000, and Retained Earnings, $350,000. 2020 Jan. 1 Sold all of the Packard shares for $108,000 cash. May 30 Received $3,100 cash dividend from AT&T. June 15 Received $1,600 cash dividend from Apple. Aug. 17 Sold all of the AT&T stock for $52,000 cash. 19 Purchased 2,000 shares of Coca-Cola common stock for $50,000 cash as a long-term invest- ment. The stock represents less than a 5% ownership in Coca-Cola. Dec. 15 Received $1,800 cash dividend from Apple. 31 Fair values of the investments in equity securities are Apple, $39,000, and Coca-Cola, $48,000. 31 For preparing financial statements, note the following post-closing account balances: Common Stock, $500,000, and Retained Earnings, $410,000. PLANNING THE SOLUTION • Account for the investment in Packard under the equity method. • Account for the investments in AT&T, Apple, and Coca-Cola as stock investments with insignificant influence. Prepare the information for the two years' balance sheets by including the relevant asset and equity accounts, and the two years' income statements by identifying the relevant revenues, earnings, gains, and losses.

2019 Sep. 9 Purchased 1,000 shares of Packard common stock for $80,000 cash. These shares represent 30% of Packard's outstanding shares. Oct. 2 Purchased 2,000 shares of AT&T common stock for $60,000 cash as a long-term investment. These shares represent less than a 1% ownership in AT&T. 17 Purchased as a long-term investment 1,000 shares of Apple common stock for $40,000 cash. These shares are less than 1% of Apple's outstanding shares. Nov. 1 Received $5,000 cash dividend from Packard. 30 Received $3,000 cash dividend from AT&T. Dec. 15 Received $1,400 cash dividend from Apple. 31 Packard's net income for this year is $70,000. [continued on next page] 31 Fair values for the investments in equity securities are Packard, $84,000; AT&T, $48,000; and Apple, $45,000. 31 For preparing financial statements, note the following post-closing account balances: Common Stock, $500,000, and Retained Earnings, $350,000. 2020 Jan. 1 Sold all of the Packard shares for $108,000 cash. May 30 Received $3,100 cash dividend from AT&T. June 15 Received $1,600 cash dividend from Apple. Aug. 17 Sold all of the AT&T stock for $52,000 cash. 19 Purchased 2,000 shares of Coca-Cola common stock for $50,000 cash as a long-term invest- ment. The stock represents less than a 5% ownership in Coca-Cola. Dec. 15 Received $1,800 cash dividend from Apple. 31 Fair values of the investments in equity securities are Apple, $39,000, and Coca-Cola, $48,000. 31 For preparing financial statements, note the following post-closing account balances: Common Stock, $500,000, and Retained Earnings, $410,000. PLANNING THE SOLUTION • Account for the investment in Packard under the equity method. • Account for the investments in AT&T, Apple, and Coca-Cola as stock investments with insignificant influence. Prepare the information for the two years' balance sheets by including the relevant asset and equity accounts, and the two years' income statements by identifying the relevant revenues, earnings, gains, and losses.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 23E

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