For the next (2) two questions: STU Company purchased 10,000 shares representing 2% ownership of Greg Company on February 15, 2020 for P3,500,000 and is accounted for as a financial asset at fair value through profit or loss. STU Company received a 20% stock dividend on March 31, 2020, when the market value per share was P400. Greg Company paid a cash dividend of P15 per share on September 15, 2020 which was declared on July 11, 2020 to shareholders of record on August 19, 2020. On August 1, 2020, when the market value per share was P325, STU Company sold 3,000 shares of Greg Company for a total consideration of P1,000,000. 7. In the income statement for the fiscal year ended October 31, 2020, what amount should be reported as dividend income? 8. Prepare all required journal entries on August 1, 2020 relevant to the sale of the shares.

For the next (2) two questions: STU Company purchased 10,000 shares representing 2% ownership of Greg Company on February 15, 2020 for P3,500,000 and is accounted for as a financial asset at fair value through profit or loss. STU Company received a 20% stock dividend on March 31, 2020, when the market value per share was P400. Greg Company paid a cash dividend of P15 per share on September 15, 2020 which was declared on July 11, 2020 to shareholders of record on August 19, 2020. On August 1, 2020, when the market value per share was P325, STU Company sold 3,000 shares of Greg Company for a total consideration of P1,000,000. 7. In the income statement for the fiscal year ended October 31, 2020, what amount should be reported as dividend income? 8. Prepare all required journal entries on August 1, 2020 relevant to the sale of the shares.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 26E

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On January 1, 2019, Kittson Company had a retained earnings balance of 218,600. It is subject to a 30% corporate income tax rate. During 2019, Kittson earned net income of 67,000, and the following events occurred: 1. Cash dividends of 3 per share on 4,000 shares of common stock were declared and paid. 2. A small stock dividend was declared and issued. The dividend consisted of 600 shares of 10 par common stock. On the date of declaration, the market price of the companys common stock was 36 per share. 3. The company recalled and retired 500 shares of 100 par preferred stock. The call price was 125 per share; the stock had originally been issued for 110 per share. 4. The company discovered that it had erroneously recorded depreciation expense of 45,000 in 2018 for both financial reporting and income tax reporting. The correct depreciation for 2018 should have been 20,000. This is considered a material error. Required: 1. Prepare journal entries to record Items 1 through 4. 2. Prepare Kittsons statement of retained earnings for the year ended December 31, 2019.
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For the next (2) two questions: STU Company purchased 10,000 shares representing 2% ownership of Greg Company on February 15, 2020 for P3,500,000 and is accounted for as a financial asset at fair value through profit or loss. STU Company received a 20% stock dividend on March 31, 2020, when the market value per share was P400. Greg Company paid a cash dividend of P15 per share on September 15, 2020 which was declared on July 11, 2020 to shareholders of record on August 19, 2020. On August 1, 2020, when the market value per share was P325, STU Company sold 3,000 shares of Greg Company for a total consideration of P1,000,000. 7. In the income statement for the fiscal year ended October 31, 2020, what amount should be reported as dividend income? 8. Prepare all required journal entries on August 1, 2020 relevant to the sale of the shares.