FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Sheridan Corporation purchased for $282,000 a 30% interest in Murphy, Inc. This investment enables Sheridan to exert significant influence over Murphy. During the year, Murphy earned net income of $172,000 and paid dividends of $65,000.
Prepare Sheridan’s
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- Ramiro Company purchased 40% of the outstanding stock of Marco Company on January 1. Marco reported net income of $90,300 and declared dividends of $20,600 during the year. How much would Ramiro adjust its investment in Marco Company under the equity method? of $arrow_forwardOn January 1, 20X8, Ball Corporation purchased shares of Leftwich Company common Stock. Assume the stock acquired by Ball represents 15% of Leftwich’s voting stock and that Ball has no influence over Leftwich’s business decisions. Use the financial statement effects template (with amounts and accounts) to record the following transactions. Ball purchased 5,000 common shares of Leftwich at $15 cash per share. Leftwich reported annual net income of $40,000. Ball received a cash dividend of $1.10 per common share from Leftwich. Year-end market price of Leftwich common stock is $19.00 per share. Assume that the stock acquired by Ball represents 30% of Leftwich’s voting stock and that Ball accounts for this investment using the equity method because it is able to exert significant influence. Use the financial statement effects template (with amounts and accounts) to record the following transactions. Ball purchased 5,000 common shares of Leftwich at $15 cash per share. Leftwich…arrow_forwardPrepare Journal entries?arrow_forward
- answer in text form please (without image)arrow_forwardSwifty Corporation purchased a 20% interest in Moss Inc. for $280. This investment gave Swifty significant influence over Moss. During the year, Moss earned net income of $15 and paid dividends of $5. Assuming the purchase price was equal to 20% of Moss's net carrying amount when it was acquired. Prepare Swifty's journal entries related to this investment using the equity method. Swifty applies IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation (To record investment purchase) (To record investment income) (To record collection of dividend) Debit Creditarrow_forwardSelk Steel Company, which began operations in Year 1, had the following transactions and events in its long-term investments. Year 1 January 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 $30.00 per share. Year 2 October 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 $32.00 per share. Year 3 January 2 Selk sold 3% (equal to 1,800 shares) of its investment in Kildaire for $54,200 cash.arrow_forward
- Willard Co. acquired a 30% interest in Diltronics for $420,000 and appropriately applied the equity method. During the first year, Diltronics reported net income of $250,000 and paid cash dividends totaling $50,000. What amount will Willard report as it relates to the investment at the end of the first year on its income statement? Show the calculation used to get the answer Investment earnings totaling $75,000 Investment earnings totaling $45,000 Net investment earnings totaling $150,000 Receipt of dividends totaling $15,000arrow_forwardBellows Inc. purchased 10,000 shares of Nesbitt Inc.’s common stock for $7.50 per share. Nesbitt Inc. has 100,000 shares of common stock outstanding. What account and amount is debited by Bellows Inc. to record the investment in Nesbitt Inc.? Assuming that Nesbitt Inc. paid a dividend of $0.40 per share, what account and amount is credited by Bellows Inc. to record the receipt of the dividend? 3 If Bellows Inc. sold 4,000 shares of Nesbitt Inc.’s common stock for $9.00 per share, how much gain on the investment would Bellows Inc. recognize?arrow_forwardAt the beginning of the year, the Lisa’s Brewery purchased a 25 percent ownership interest in Down Under Brewery of Brisbane, Australia. The investment cost $15 million. At year-end, Down Under Brewery declared and paid cash dividends to shareholders totaling $400,000, after reporting earnings of $2.5 million. A. Calculate the income statement effect of Lisa’s’s investment in Down Under Brewery as of year-end.B. Calculate the book value of Lisa’s equity investment in Down Under Brewery at year-end.C. Calculate the book value of Lisa’s equity investment in Down Under Brewery at year-end assuming that Down Under reported a loss of $1.5 million instead of a profit of $2.5 million and still paid its dividend of $400,00arrow_forward
- Wildhorse Corporation purchased for $316,000 a 30% interest in Murphy, Inc. This investment enables Wildhorse to exert significant influence over Murphy. During the year, Murphy earned net income of $179,000 and paid dividends of $58,000.Prepare Wildhorse’s journal entries related to this investment.arrow_forwardSheridan Corporation purchased for $325,000 a 25% interest in Murphy, Inc. This investment enables Sheridan to exert significant influence over Murphy. During the year, Murphy earned net income of $183,000 and paid dividends of $66,000.Prepare Sheridan’s journal entries related to this investment.arrow_forwardAs a long-term investment, Painters’ Equipment Company purchased 20% of AMC Supplies Inc.’s 400,000 shares for $480,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC’s net assets were equal. During the year, AMC earned net income of $250,000 and distributed cash dividends of 25 cents per share. At year-end, the fair value of the shares is $505,000. Required: 1. Assume no significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year. 2. Assume significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year.arrow_forward
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