Journalize the stock investment transactions for Company S, under the equity method.

Question

On January 4, 20Y6, Spandella Company purchased 160,000 shares of Filington Company directly from one of the founders for a price of $30 per share. Filington has 400,000 shares outstanding, including the Spandella shares. On July 2, 20Y6, Filington paid $600,000 in total dividends to its shareholders. On December 31, 20Y6, Filington reported a net income of $1,200,000 for the year. Spandella uses the equity method in accounting for its investment in Filington. a. Journalize the Spandella Inc. entries for the transactions involving its investment in Filington Company during 20Y6. 20Y6 Jan. 4 20Y6 July 2 20Y6 Dec. 31 b. Determine the December 31, 20Y6, balance of the investment in Filington Company stock account.

Answer 1

Question

Chapter D, Problem 7E

(a)

To determine

Journalize the stock investment transactions for Company S, under the equity method.

(b)

To determine

Determine the balance of the investment-Company F stock account, as of December 31, 20Y6.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Students have asked these similar questions

On January 4, 20Y6, Spandella Company purchased 160,000 shares of Filington Company directly from one of the founders for a price of $30 per share. Filington has 400,000 shares outstanding, including the Spandella shares. On July 2, 20Y6, Filington paid $600,000 in total dividends to its shareholders. On December 31, 20Y6, Filington reported a net income of $1,200,000 for the year. Spandella uses the equity method in accounting for its investment in Filington. a. Journalize the Spandella Inc. entries for the transactions involving its investment in Filington Company during 20Y6. 20Y6 Jan. 4 20Y6 July 2 20Y6 Dec. 31 b. Determine the December 31, 20Y6, balance of the investment in Filington Company stock account.

On January 4, Year 1, Barber Company purchased 13,500 shares of Convell Company for $162,000. Convell Company has a total of 67,500 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.75 per share, and its net income was $123,000 and $118,000 for Year 1 and Year 2 , respectively. The January 2, Year 3, entry to record Barber's sale of 8,100 shares of Convell Company stock, which represents 60% of Barber's total investment, for $109,350 cash, should be: Multiple Choice Debit Cash $109,350; debit Loss on Sale of Stock Investment $9,510; credit Equity Method Investments $99,840. Debit Cash $109,350; credit Gain on Sale of Stock Investment $20,250; credit Equity Method Investments $89,100. Debit Cash $109,350; debit Loss on Sale of Stock Investment $57,050; credit Equity Method Investments $162,000. Debit Cash $109,350; debit Loss on Sale of…

On January 4, 20Y4, Ferguson Company purchased 480,000 shares of Silva Company’s common stock directly from one of the founders for a price of $30 per share. Silva has 1,200,000 shares outstanding, including the Daniels shares. On July 2, 20Y4, Silva paid $750,000 in total dividends to its shareholders. On December 31, 20Y4, Silva reported a net income of $2,000,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva. Required: a. Journalize the Ferguson Company entries for the transactions involving its investment in Silva Company during 20Y4. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. b. Determine the December 31, 20Y4, balance of the investment in Silva Company stock account. CHART OF ACCOUNTS…