Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter D, Problem 12E
a.
To determine
Prepare the “current assets” section of the
b.
To determine
Identify the impact of change in fair value on the “
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During Year 1, its first year of operations, Galileo Company purchased two available-forsale investments as follows:
Please see the attachment for details:
Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $50 per share and the Pavlov Co. stock had a market value of $24 per share. Galileo Company had net income of $300,000 and paid no dividends for the year ended December 31, Year 1. All of the available-for-sale investments are classified as current assets.a. Prepare the Current Assets section of the balance sheet presentation for the availablefor-sale investments.b. Prepare the Stockholders’ Equity section of the balance sheet to reflect the earnings and unrealized gain (loss) for the available-for-sale investments.
Stuart Corp. purchased $80,000 of Dumb Co. bonds and $120,000 of Silly Inc. bonds. Both investments are classified as trading. As of December 31, the Dumb Co. bonds are selling for $90,000 and the Silly Inc. bonds are selling for $140,000 per share. Stuart had net income of $150,000 before reporting the impact of investment transactions.
Required:
a.
Record the December 31 adjusting entries for investments.
b.
What is Stuart Corp.'s net income after adjusting for investments?
c.
What is the appropriate balance sheet presentation for these investments?
Aylmer Corp has the following transactions relating to investments.
Aylmer Corp has a December 31 year end.
01-Sep-19 Aylmer Corp purchased 3,100 shares of Belmont Inc at $13.00 per share.
31-Oct-19 Belmont Inc paid dividends of $5.00 per share.
31-Dec-19 Belmont Inc shares had a fair value of $12.00 per share.
31-Dec-19 Belmont Inc reported net income of $63,000 for the year.
01-Mar-20 Aylmer Corp sold all of Belmont Inc shares for $17.00 per share.
Additional Information:
Assume Aylmer Corp uses the fair value through other comprehensive income (FV-OCI) method to account for its investments.
Dividend income is required to be recorded in a separate account.
REQUIRED:
Prepare the appropriate entries for the above transactions.
Chapter D Solutions
Financial And Managerial Accounting
Ch. D - Prob. 1ECh. D - Prob. 2ECh. D - Starks Products uses the cost method to account...Ch. D - Prob. 4ECh. D - Prob. 5ECh. D - Prob. 6ECh. D - Prob. 7ECh. D - On January 1, 20Y9, Valuation Allowance for...Ch. D - The investments of Charger Inc. include a single...Ch. D - Jets Bancorp Inc. purchased a portfolio of trading...
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