Ex. 182Sandafor Company had these transactions pertaining to stock investments:Feb1Purchased 2,400 shares of BFF common stock (2% of outstanding shares) for$16,500 cash.July1Received cash dividends of $0.80 per share on BFF common stock.Sept.1Sold 800 shares of BFF common stock for $7,900Dec.1Received cash dividends of $.80 per share on BFF common stock.InstructionsJournalize the transactions.Ans: N/A, LO: 2, Bloom: AP, Difficulty: Medium, Min: 8, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC:Problem Solving, IMA: FSAFOR INSTRUCTOR USE ONLYH-50
Reporting and Analyzing InvestmentsSolution 182(8 min.)Feb.1Stock Investments.......................................................16,500Cash....................................................................16,500July1Cash (2,400×$.80)....................................................1,920Dividend Revenue..............................................1,920Sept.1Cash.............................................................................7,900Stock Investments($16,500×800/2,400)........................................5,500Gain on Sale of Stock Investments($7,900 – $5,500)................................................2,400**(sell. pr. − (inv. cost×800/2,400))Dec.1Cash (1,600× $.80)....................................................1,280*Dividend Revenue...............................................1,280*(sh. pur. − sh. sold)×div./sh.Ex. 183PWAT Inc. had these transactions pertaining to investments in common stock:Jan1Purchased 2,000 shares of Pasco Corporation common stock (5% of outstandingshares) for $96,500 cash.July1Received a cash dividend of $1.70 per share.Dec.1Sold 800 shares of Pasco Corporation common stock for $40,200.31Received a cash dividend of $1.70 per share.InstructionsJournalize the transactions.Ans: N/A, LO: 2, Bloom: AP, Difficulty: Medium, Min: 8, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC:Problem Solving, IMA: FSAFOR INSTRUCTOR USE ONLYH-51
Test Bank for Financial Accounting: Tools for Business Decision Making, Eighth EditionSolution 183(8 min.)Jan.1Stock Investments.......................................................96,500Cash...................................................................96,500July1Cash (2,000×$1.70)..................................................3,400Dividend Revenue..............................................3,400Dec.1Cash.........................................................................40,200Gain on Sale of Stock Investments..........................1,600*Stock Investments($96,500×800/2,000).........................................38,600*(Sell. price − (inv. cost×800/2,000))Dec.31Cash (1,200×$1.70)...................................................2,040*Dividend Revenue...................................................2,040*(Sh. pur.−sh. sold)×div./sh.Ex. 184Ultra Cosmetics acquired 10% of the 200,000 shares of common stock of Kardashian Fashion ata total cost of $14 per share on March 18, 2022. On June 30 Kardashian declared and paid a$96,000 dividend. On December 31 Kardashian reported net income of $244,000 for the year. AtDecember 31 the market price of Kardashian Fashion was $16 per share.InstructionsPrepare all the necessary entries for 2022 for Ultra Cosmetics.Ans: N/A, LO: 2, 3, Bloom: AP, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC:Problem Solving, IMA: FSASolution 184(5 min.)Mar.18Stock Investments.......................................................280,000Cash (200,000×10%×$14)..............................280,000June 30Cash.............................................................................9,600Dividend Revenue(96,000× 10%).................................................9,600Dec.31Fair Value Adjustment—Stock........................................................................40,000*Unrealized Gain or Loss—Income($320,000 – $280,000)....................................40,000*(sh. purch.×mar. pr./sh.) − inv. costFOR INSTRUCTOR USE ONLYH-52
Reporting and Analyzing InvestmentsEx. 185La Bouisse Inc. obtained significant influence over E-Stock Corporation by buying 40% of E-Stock 30,000 outstanding shares common stock at a total cost of $11 per share on January 1,2022. On June 15 E-Stock declared and paid a cash dividend of $32,000. On December 31 E-Stock reported a net income of $120,000 for the year.
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