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 5,400 shares of Malmo Inc. as an available-for-sale investment at $36 per share, including the brokerage commission. July 22. A cash dividend of $0.45 per share was received on the Malmo stock. Oct. 5. Sold 1,600 shares of Malmo Inc. stock at $39 per share less a brokerage commission of $50. Dec. 18. Received a regular cash dividend of $0.45 per share on Malmo Inc. stock. Dec. 31 Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $34 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 $670,000 by purchasing 73,500 shares directly from the estate of the founder of Helsi. There are 210,000 shares of Helsi Co. stock outstanding. July 16. Received a cash dividend of $0.55 per share on Malmo Inc. stock. Dec. 16. Received a cash dividend of $0.55 per share plus an extra dividend of $0.10 per share on Malmo Inc. stock. Dec. 31 Received $20,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $82,000 in Year 2. Glacier Products Inc. uses the equity method of accounting for its investment in Helsi Co. Dec. 31 Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $40 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $34 to $40 per share. Required: 1. Journalize the entries to record the preceding transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. In your computations, round per share amounts to two decimal places.
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 5,400 shares of Malmo Inc. as an available-for-sale investment at $36 per share, including the brokerage commission. July 22. A cash dividend of $0.45 per share was received on the Malmo stock. Oct. 5. Sold 1,600 shares of Malmo Inc. stock at $39 per share less a brokerage commission of $50. Dec. 18. Received a regular cash dividend of $0.45 per share on Malmo Inc. stock. Dec. 31 Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $34 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 $670,000 by purchasing 73,500 shares directly from the estate of the founder of Helsi. There are 210,000 shares of Helsi Co. stock outstanding. July 16. Received a cash dividend of $0.55 per share on Malmo Inc. stock. Dec. 16. Received a cash dividend of $0.55 per share plus an extra dividend of $0.10 per share on Malmo Inc. stock. Dec. 31 Received $20,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $82,000 in Year 2. Glacier Products Inc. uses the equity method of accounting for its investment in Helsi Co. Dec. 31 Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $40 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $34 to $40 per share. Required: 1. Journalize the entries to record the preceding transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. In your computations, round per share amounts to two decimal places.
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 3PB: Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January...
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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 5,400 shares of Malmo Inc. as an available-for-sale investment at $36 per share, including the brokerage commission. |
July 22. | A cash dividend of $0.45 per share was received on the Malmo stock. |
Oct. 5. | Sold 1,600 shares of Malmo Inc. stock at $39 per share less a brokerage commission of $50. |
Dec. 18. | Received a regular cash dividend of $0.45 per share on Malmo Inc. stock. |
Dec. 31 | Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $34 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 $670,000 by purchasing 73,500 shares directly from the estate of the founder of Helsi. There are 210,000 shares of Helsi Co. stock outstanding. |
July 16. | Received a cash dividend of $0.55 per share on Malmo Inc. stock. |
Dec. 16. | Received a cash dividend of $0.55 per share plus an extra dividend of $0.10 per share on Malmo Inc. stock. |
Dec. 31 | Received $20,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $82,000 in Year 2. Glacier Products Inc. uses the equity method of accounting for its investment in Helsi Co. |
Dec. 31 | Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $40 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $34 to $40 per share. |
Required:
1.
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