ACCOUNTING

ACCOUNTING - 1)pk acquired a 25% interest in Trent Co. on...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
1)pk acquired a 25% interest in Trent Co. on January 1, 2010, for $500,000. At that time, Trent had 1,000,000 shares of its $1 par common stock issued and outstanding. During 2010, Trent paid cash dividends of $160,000 and thereafter declared and issued a 5% common stock dividend when the market value was $2 per share. Trent's net income for 2010 was $360,000. What is the balance in Agee’s investment account at the end of 2010 Cost $500,000 Share of net income (.25 × $360,000) 90,000 Share of dividends (.25 × $160,000) (40,000 ) Balance in investment account $550,000 2)During 2008, PK Co. purchased 2,000, $1,000, 9% bonds. The carrying value of the bonds at December 31, 2010 was $1,960,000. The bonds mature on March 1, 2015, and pay interest on March 1 and September 1. PK sells 1,000 bonds on September 1, 2012, for $988,000, after the interest has been received. PK uses straight-line amortization. The gain on the sale is Discount amortization: $40,000 × 8/50 = $6,400 ($1,960,000 + $6,400) ÷ 2 = $983,200; $988,000 – $983,200 = $4,800 gain. 1. On August 1, 2011, Lane Corporation called its 10% convertible bonds for conversion.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/15/2011 for the course ACCT 202 taught by Professor Prof.dasfada during the Winter '10 term at Harvard.

Page1 / 2

ACCOUNTING - 1)pk acquired a 25% interest in Trent Co. on...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online