Chpt_17_Solutions - EXERCISE 17-7(1015 minutes(a Unrealized...

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EXERCISE 17-7 (10–15 minutes) (a) December 31, 2006 Unrealized Holding Gain or Loss—Income. ............ 1,400 Securities Fair Value Adjustment (Trading). ... 1,400 (b) During 2007 Cash. ........................................................................... 9,400 Loss on Sale of Securities. ....................................... 600 Trading Securities. ............................................. 10,000
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EXERCISE 17-7 (Continued) (c) December 31, 2007 Securities Cost Fair Value Unrealized Gain (Loss) Clemson Corp. stock $20,000 $19,100 ( $ (900) Buffaloes Co. stock 20,000 20,500 ( 500 ) Total of portfolio $40,000 $39,600 ( (400) Previous securities fair value adjustment balance—Cr. ( (1,400 ) Securities fair value adjustment—Dr. ( $1,000 ) Securities Fair Value Adjustment (Trading). .............. 1,000 Unrealized Holding Gain or Loss— Income. ............................................................... 1,000 EXERCISE 17-13 (20–25 minutes) (a) $110,000, the increase to the Investment account. (b) If the dividend payout ratio is 40%, then 40% of the net income is their share of dividends = $44,000. (c) Their share is 25%, so, Total Net Income X 25% = $110,000 Total Net Income = $110,000 ÷ 25% = $440,000 (d) $44,000 ÷ 25% = $176,000 or $440,000 X 40% = $176,000 PROBLEM 17-6 (a) (1) October 10, 2007 Cash (5,000 X $54). ........................................... 270,000
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Chpt_17_Solutions - EXERCISE 17-7(1015 minutes(a Unrealized...

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