Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31:Year 1Jan. 18. Purchased 9,000 shares of Malmo Inc. as an available-for-sale investment at $40 per share, including the brokerage commission.July 22. A cash dividend of $3 per share was received on the Malmo stock.Oct. 5. Sold 500 shares of Malmo Inc. stock at $58 per share less a brokerage commission of $100.Dec. 18. Received a regular cash dividend of $30 per share on Malmo Inc. stock.31. Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $36 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment.Year 2Jan. 25. Purchased an influential interest in Helsi Co. for $800,000 by purchasing 75,000 shares directly from the estate of the founder of Helsi. There are 250,000 shares of Helsi Co. stock outstanding.July 16. Received a cash dividend of $3 per share on Malmo Inc. stock.Dec. 16. Received a cash dividend of $3 per share plus an extra dividend of $0.20 per share on Malmo Inc. stock.31. Received $38,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $170,000 in Year 2. Glacier Products Inc. uses the equity method of accounting for its investment in Helsi Co.31. Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $44 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $36 to $44 per share.Instructions1. Journalize the entries to record the preceding transactions.2. Prepare the investment-related asset and stockholders’ equity balance sheet presentation for Glacier Products Inc. on December 31, Year 2, assuming that the Retained Earnings balance on December 31, Year 2, is $700,000.
Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31:
Year 1
Jan. 18. Purchased 9,000 shares of Malmo Inc. as an available-for-sale investment at $40 per share, including the brokerage commission.
July 22. A cash dividend of $3 per share was received on the Malmo stock.
Oct. 5. Sold 500 shares of Malmo Inc. stock at $58 per share less a brokerage commission of $100.
Dec. 18. Received a regular cash dividend of $30 per share on Malmo Inc. stock.
31. Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $36 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment.
Year 2
Jan. 25. Purchased an influential interest in Helsi Co. for $800,000 by purchasing 75,000 shares directly from the estate of the founder of Helsi. There are 250,000 shares of Helsi Co. stock outstanding.
July 16. Received a cash dividend of $3 per share on Malmo Inc. stock.
Dec. 16. Received a cash dividend of $3 per share plus an extra dividend of $0.20 per share on Malmo Inc. stock.
31. Received $38,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $170,000 in Year 2. Glacier Products Inc. uses the equity method of accounting for its investment in Helsi Co.
31. Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $44 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $36 to $44 per share.
Instructions
1.
2. Prepare the investment-related asset and
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