**Investment Accounting in Band Inc. for Year 1**In this section, we will walk through the process of preparing the necessary journal and adjusting entries related to investments made in Band Inc. during Year 1. This is a critical part of keeping accurate financial records and ensuring compliance with accounting principles.---*For Year 1, prepare any journal and adjusting entries related to the investment in Band Inc.*---Follow these steps:1. **Initial Investment Entry**: Record the original investment in Band Inc. - **Debit**: Investment in Band Inc. account - **Credit**: Cash or Bank account2. **Dividend Received Entry**: If any dividends are received from Band Inc., record them. - **Debit**: Cash or Dividend Receivable account - **Credit**: Dividend Income account3. **Adjusting Entries**: At the end of the year, make any necessary adjustments, such as for market value changes or accruals. - **Debit/Credit**: Adjustment accounts as per market value changes - **Credit/Debit**: Investment in Band Inc. account4. **Income from Investment**: Recognize any income earned from the investment during the year. - **Debit**: Investment in Band Inc. account - **Credit**: Income from Investment account---Ensure to review the specific financial guidelines and standards applicable to your region or organization for detailed procedures and compliance. This process helps to present a true and fair view of the financial position regarding investments in the company's financial statements. ### Investment Activities of Parade Corp. Related to Band Inc.**Overview:**Parade Corp. has a fiscal year ending on December 31. The following outlines the investment activities between Parade Corp. and Band Inc. over the span of approximately one year.*Year 1:*- **January 2:** - Parade Corp. invested $5,000,000 in Band Inc. by purchasing 400,000 shares of stock. - This investment represents 40% of Band Inc.’s total outstanding stock.- **December 31:** - Band Inc. achieved $800,000 in net income for the year. - Band Inc. declared and distributed dividends totaling $500,000 for Year 1.*Year 2:*- **March 5:** - Parade Corp. sold all 400,000 shares of Band Inc. stock at a price of $20 per share. **Diagram/Graph:**Note: No diagrams or graphs accompany this text. The provided data is presented in a tabular format, which is summarized above for clarity.---This transcription preserves the financial details and timeline of Parade Corp.'s investment for educational purposes.

Journal Entries:Journal entries are the systematic recordings of business transactions in the…

The following investment activities relate to Parade Corp. Parade has a December 31 year end. Year 1: January 2 December 31 December 31 Year 2: March 5 Parade Corp. paid $5,000,000 cash to acquire 400,000 shares of stock in Band Inc.; these shares represent 40% of Band Inc.'s total outstanding stock. Band Inc. earned $800,000 in net income for Year 1. Band Inc. declared and paid $500,000 in dividends for Year 1. Parade sold all 400,000 shares of the Band Inc. stock for $20 per share

The following investment activities relate to Parade Corp. Parade has a December 31 year end. Year 1: January 2 December 31 December 31 Year 2: March 5 Parade Corp. paid $5,000,000 cash to acquire 400,000 shares of stock in Band Inc.; these shares represent 40% of Band Inc.'s total outstanding stock. Band Inc. earned $800,000 in net income for Year 1. Band Inc. declared and paid $500,000 in dividends for Year 1. Parade sold all 400,000 shares of the Band Inc. stock for $20 per share

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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