P1-25 - 25(Preparation of journal entries for two years...

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25. (Preparation of journal entries for two years, includes losses and intercompany transfers of inventory) Journal Entries for Hobson Co. 1/1/08 Investment in Stokes Co . ............. 210,000 Cash ......................................... 210,000 (To record initial investment) During Cash ............................................... 4,000 2008 Investment in Stokes Co ......... 4,000 (To record receipt of dividend) 12/31/08 Equity in Stokes Income—Loss .. 16,000 Extraordinary Loss of Stokes ...... 8,000 Investment in Stokes Co ......... 24,000 (To record accrual of income as earned by equity investee, 40% of reported balances) 12/31/08 Equity in Stokes Income—Loss .. 3,300 Investment in Stokes Co ......... 3,300 (To record amortization relating to acquisition of Stokes—see Schedule 1 below) 12/31/08 Equity in Stokes Income-Loss ..... 2,000 Investment in Stokes Co ......... 2,000 (To defer unrealized gain on intercompany sale see Schedule 2 below) During Cash ............................................... 4,800 2009 Investment in Stokes Co ......... 4,800 (To record receipt of dividend) 12/31/09 Investment in Stokes Co . ............. 16,000 Equity in Stokes Income ......... 16,000 (To record 40% accrual of income as earned by equity investee)
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12/31/09 Equity in Stokes Income .............. 3,300 Investment in Stokes Co ......... 3,300
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  • Spring '08
  • Ross,M
  • ........., Generally Accepted Accounting Principles, Stokes Co