Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter 15, Problem 4PA
O’Brien Industries Inc. is a book publisher. The comparative unclassified balance sheets for December 31, 2017 and 2016 follow. Selected missing balances are shown by letters.
Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, 2016, are as follows:
Note 2. The investment in Jolly Roger Co. stock is an equity method investment representing 30% of the outstanding shares of Jolly Roger Co. The following selected investment transactions occurred during 2017:
| May 5. | Purchased 3,080 shares of Gozar Inc. at $30 per share including brokerage commission. Gozar Inc. is classified as an available-for-sale security. |
| Oct. 1. | Purchased $40,000 of Nightline Co. 6%, 10-year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on October 1 and April 1. |
| 9. | Dividends of $12,500 are received on the Jolly Roger Co. investment. |
| Dec. 31. | Jolly Roger Co. reported a total net income of $112,000 for 2017. O’Brien Industries Inc. recorded equity earnings for its share of Jolly Roger Co. net income. |
| 31. | Accrued three months of interest on the Nightline bonds. |
| 31. | Adjusted the available-for-sale investment portfolio to fair value, using the following fair value per-share amounts: |
| 31. | Closed the O’Brien Industries Inc. net income of $146,230. O’Brien Industries Inc. paid no dividends during the year. |
Instructions
Determine the missing letters in the unclassified balance sheet. Provide appropriate supporting calculations.
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Record the appropriate journal entry to reflect the following:
The investments that Veggies-R-Us. Inc. currently has in their investment account (current asset) represents investments that were purchased recently. Based upon stock market auotes obtained for December 31, 20XX, the market value of these investments = $112,000. (It is management's intent to actively manage these shares for profit.)
You have been provided with the partial Trail Balance for this company below:
Veggies-R-Us.
Trial Balance (Partial)
December 31, 20XX
Cash $26,750 (Debit)
Accounts Receivable $47,630 (Debit)
Allowance for doubtful accounts $250 (Debit)
Prepaid rent $1,680 (Debit)
Supplies $8,700 (Debit)
Investments $113,520 (Debit)
Furniture $15,350 (Debit)
JED Capital Inc. makes investments in trading securities. Selected income statement items for the years ended December 31, Year 2 and Year 3, plus selected items from comparative balance sheets, are as follows:
Please see the attachment for details:
Determine the missing lettered items.
Following balances are extracted from the books of City Light Supply Corporation
$
as on 31st March, 2016 :
$
Equity Shares
Debentures
Sundry Creditors on Open Accounts
Depreciation Fund
Capital Expenditure on 31-3-2015
Capital Expenditure during 2015-16
Sundry Debtors for Current Supplied
Other Debtors
Stores in Hand
Cash in Hand
Cost of Generation of Electricity
Cost of Distribution of Electricity
Rent, Rates and Taxes
Management Expenses
Depreciation
Interest on Debentures
Interim Dividend
Sale of Current
Meter Rent
Balance of Net Revenue Account as on 1st April, 2015
1,64,700
60,000
300
75,000
2,85,000
18,300
12,000
150
1,500
1,500
9,000
1,500
1,500
3,600
6,000
3,000
6,000
39,000
1,500
8,550
3,49,050
3,49,050
Prepare:-
(a) Capital Account
(b) Revenue Account
(c) Net Revenue Account and
(d) General Balance sheet from the above Trail Balance.
Chapter 15 Solutions
Financial Accounting
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