Fair Value Method On January 1, 2019, Miller Inc. acquired 1.500 shares of the outstanding common stock of Graceland Industries for SI 6 per share, or S24.000. On that date, Graceland had 10.000 shares of common stock outstanding. On October 1, 2019, Graceland declared and paid a cash dividend of $2 per share. On November 13, 2019, Miller sold 300 shares of Graceland for $5,000. Graceland reported 2019 net income of S36.000. Graceland’s stock sold for $15 per share at December 31, 2019. This is Miller’s only investment, and Miller plans on remaining invested in Graceland for a number of years. Required: 1. Prepare Miller’s journal entries to record the transactions related to its investment in Graceland. 2. Give the title and amount of each item (except Cash) related to this investment on the December 31,2019 balance sheet. Name the balance sheet section in which each item appears.

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter A2, Problem 24E
Textbook Problem

Fair Value Method

On January 1, 2019, Miller Inc. acquired 1.500 shares of the outstanding common stock of Graceland Industries for SI 6 per share, or S24.000. On that date, Graceland had 10.000 shares of common stock outstanding. On October 1, 2019, Graceland declared and paid a cash dividend of $2 per share. On November 13, 2019, Miller sold 300 shares of Graceland for $5,000. Graceland reported 2019 net income of S36.000. Graceland’s stock sold for $15 per share at December 31, 2019. This is Miller’s only investment, and Miller plans on remaining invested in Graceland for a number of years.

Required:

1. Prepare Miller’s journal entries to record the transactions related to its investment in Graceland.

2. Give the title and amount of each item (except Cash) related to this investment on the December 31,2019 balance sheet. Name the balance sheet section in which each item appears.

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Chapter A2 Solutions

Cornerstones of Financial Accounting
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