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Quiz 8 Answers

Quiz 8 Answers - Investment in affiliates 5,000 If 10,000...

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Name ___________________________ USC ID# _________________________ Class (Circle) ___ 2PM or 4 PM_ _______ QUIZ 8 Record general journal entries for each of the transactions described below. 2 Points each entry, partial credit only where noted. Total 10 Points. Account names do not have to be specifically the names shown, unless noted in blue. 1. M&A Inc purchased 100% of TargetCo for $100,000 cash. The Fair Market Value of the Property and Equipment acquired was $90,000. M&A also agreed to assume $20,000 of TargetCo’s liabilities. Record the purchase of TargetCo. Assets or Property and Equip 90,000 Goodwill – This is only name OK 30,000 Liabilities or Debt 20,000 Cash - 100,000 2. TwoToo, Inc. owns 500 shares of OneUp Production’s 1,000 shares issued and outstanding and is considered to have significant influence on OneUp. Record entries on TwoToo’s books: a. OneUp earns net income for the year, after taxes, of $10,000
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Unformatted text preview: Investment in affiliates 5,000 If 10,000 is used, minus 1 Equity in affiliates earnings 5,000 b. OneUp pays dividends of $2 per share Cash 1,000 Investment in affiliates 1,000 3. YellCo purchased 5,000 shares of SubCo at $25 per share on January 1, 2011. YellCo carries SubCo as a Security Available for Sale. You do not need to record the entry for the purchase. a. There is no other activity for SubCo until December 31, 2011 when YellCo’s books are being closed. At that date, SubCo’s fair market value is $30 per share. Record the entry on YellCo’s books. Investment in Subco 25,000 Unrealized gain OCI 25,000 b. On January 10, 2012, YellCo sells all 5, 000 shares of SubCo stock for $32 per share. Cash 160,000 Unrealized gain OCI 25,000 Investment in Subco 150,000 Gain on sale of investments 35,000 Page 1 of 1...
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