Stock Investment Transactions, Equity Method and Available-for-Sale Securities 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 8,000 shares of Malmo Inc. as an available-for-sale investment at $54 per share, including the brokerage commission. July 22. A cash dividend of $0.60 per share was received on the Malmo stock. Oct. 5. Sold 3,600 shares of Malmo Inc. stock at $57 per share less a brokerage commission of $55. Dec. 18. Received a regular cash dividend of $0.60 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 $52 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 $750,000 by purchasing 31,500 shares directly from the estate of the founder of Helsi. There are 90,000 shares of Helsi Co. stock outstanding. July 16. Received a cash dividend of $0.70 per share on Malmo Inc. stock. Dec. 16. Received a cash dividend of $0.70 per share plus an extra dividend of $0.15 per share on Malmo Inc. stock. Dec. 31 Received $23,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $95,000 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 $57 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $52 to $57 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. Date Description Debit Credit Year 1 Jan. 18. fill in the blank 2 fill in the blank 4 July 22. fill in the blank 6 fill in the blank 8 Oct. 5. fill in the blank 10 fill in the blank 11 fill in the blank 13 fill in the blank 14 fill in the blank 16 fill in the blank 17 Dec. 18. fill in the blank 19 fill in the blank 21 Dec. 31 fill in the blank 23 fill in the blank 25 Year 2 Jan. 25. fill in the blank 27 fill in the blank 29 July 16. fill in the blank 31 fill in the blank 33 Dec. 16. fill in the blank 35 fill in the blank 37 Dec. 31-Dividends fill in the blank 39 fill in the blank 41 Dec. 31-Income fill in the blank 43 fill in the blank 45 Dec. 31-Valuation fill in the blank 47 fill in the blank 49 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 $548,000. Glacier Products, Inc. Balance Sheet (selected items) December 31, Year 2 Current Assets: fill in the blank 51 fill in the blank 53 fill in the blank 55 Investments: fill in the blank 57 Stockholders' Equity: fill in the blank 59 fill in the blank 61

Stock Investment Transactions, Equity Method and Available-for-Sale Securities 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 8,000 shares of Malmo Inc. as an available-for-sale investment at $54 per share, including the brokerage commission. July 22. A cash dividend of $0.60 per share was received on the Malmo stock. Oct. 5. Sold 3,600 shares of Malmo Inc. stock at $57 per share less a brokerage commission of $55. Dec. 18. Received a regular cash dividend of $0.60 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 $52 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 $750,000 by purchasing 31,500 shares directly from the estate of the founder of Helsi. There are 90,000 shares of Helsi Co. stock outstanding. July 16. Received a cash dividend of $0.70 per share on Malmo Inc. stock. Dec. 16. Received a cash dividend of $0.70 per share plus an extra dividend of $0.15 per share on Malmo Inc. stock. Dec. 31 Received $23,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $95,000 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 $57 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $52 to $57 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. Date Description Debit Credit Year 1 Jan. 18. fill in the blank 2 fill in the blank 4 July 22. fill in the blank 6 fill in the blank 8 Oct. 5. fill in the blank 10 fill in the blank 11 fill in the blank 13 fill in the blank 14 fill in the blank 16 fill in the blank 17 Dec. 18. fill in the blank 19 fill in the blank 21 Dec. 31 fill in the blank 23 fill in the blank 25 Year 2 Jan. 25. fill in the blank 27 fill in the blank 29 July 16. fill in the blank 31 fill in the blank 33 Dec. 16. fill in the blank 35 fill in the blank 37 Dec. 31-Dividends fill in the blank 39 fill in the blank 41 Dec. 31-Income fill in the blank 43 fill in the blank 45 Dec. 31-Valuation fill in the blank 47 fill in the blank 49 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 $548,000. Glacier Products, Inc. Balance Sheet (selected items) December 31, Year 2 Current Assets: fill in the blank 51 fill in the blank 53 fill in the blank 55 Investments: fill in the blank 57 Stockholders' Equity: fill in the blank 59 fill in the blank 61

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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Stock Investment Transactions, Equity Method and Available-for-Sale Securities

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 8,000 shares of Malmo Inc. as an available-for-sale investment at $54 per share, including the brokerage commission.
July 22.	A cash dividend of $0.60 per share was received on the Malmo stock.
Oct. 5.	Sold 3,600 shares of Malmo Inc. stock at $57 per share less a brokerage commission of $55.
Dec. 18.	Received a regular cash dividend of $0.60 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 $52 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 $750,000 by purchasing 31,500 shares directly from the estate of the founder of Helsi. There are 90,000 shares of Helsi Co. stock outstanding.
July 16.	Received a cash dividend of $0.70 per share on Malmo Inc. stock.
Dec. 16.	Received a cash dividend of $0.70 per share plus an extra dividend of $0.15 per share on Malmo Inc. stock.
Dec. 31	Received $23,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $95,000 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 $57 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $52 to $57 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.

Date	Debit	Credit
Year 1
Jan. 18.	fill in the blank 2
		fill in the blank 4

July 22.	fill in the blank 6
		fill in the blank 8

Oct. 5.	fill in the blank 10	fill in the blank 11
	fill in the blank 13	fill in the blank 14
	fill in the blank 16	fill in the blank 17

Dec. 18.	fill in the blank 19
		fill in the blank 21

Dec. 31	fill in the blank 23
		fill in the blank 25

Year 2
Jan. 25.	fill in the blank 27
		fill in the blank 29

July 16.	fill in the blank 31
		fill in the blank 33

Dec. 16.	fill in the blank 35
		fill in the blank 37

Dec. 31-Dividends	fill in the blank 39
		fill in the blank 41

Dec. 31-Income	fill in the blank 43
		fill in the blank 45

Dec. 31-Valuation	fill in the blank 47
		fill in the blank 49

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 $548,000.

Glacier Products, Inc. Balance Sheet (selected items) December 31, Year 2
Current Assets:
	fill in the blank 51
	fill in the blank 53
		fill in the blank 55
Investments:
		fill in the blank 57
Stockholders' Equity:
		fill in the blank 59
		fill in the blank 61

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