. The common stock of Wilson, Inc. is owned by 20 stockholders. Doe & Doe, CPAs audited Wilson's financial statements as of December 31, 2017. The audit firm rendered an unqualified opinion on the financial statements. Relying on Wilson's financial statements, which showed net income for 2017 of $1,500,000, Peters purchased 10,000 shares of Wilson stock for $200,000 on April 10, 2018. Wilson's financial statements contained material misstatements. Because Doe & Doe did not carefully follow professional auditing standards, it did not discover that the statements failed to reflect unrecorded expenses, which reduced Wilson's actual net income to $800,000. After disclosure of the corrected financial statements, Peters sold his shares for $100,000, which was the highest price he could obtain. Peters has brought an action against Doe & Doe under federal securities law and common law. Answer the following, setting forth reasons for your conclusions: Will Peters prevail on his…

At the beginning of 2016, Pioneer Products’ ownership interest in the common stock of LLB Co. increased to the point that it became appropriate to begin using the equity method of accounting for the investment. The balance in the investment account was $44 million at the time of the change but would have been $56 million if Pioneer had used the equity method and the account had been adjusted for investee net income and dividends. How should Pioneer report the change? Would your answer be the same if Pioneer is changing from the equity method rather than to the equity method?

Porter Corporation purchased 80% of the common stock of Salem Company for $850,000 on January 1, 2013. During the next three years, Salem had the following income and Dividends paid: Year Income Dividends 2013 $100,000 $25,000 2014 $110,000 $35,000 2015 $170,000 $60,000 Prepare the journal entries made under both methods and then compute the ending balance in the "investment" account under both methods.

On January 2, 2016, Well Co. purchased 10% of Rea Inc.’s outstanding common shares for $400,000. Well is the largest single shareholder in Rea, and Well’s officers are a majority on Rea’s board of directors. Rea reported net income of $500,000 for 2016, and paid dividends of $150,000. In its December 31, 2016, balance sheet, what amount should Well report as investment in Rea? a. $435,000 b. $450,000 c. $400,000 d. $385,000

Key Company purchased 800 shares of Franklin Company stock at a total cost of $ 7,560 on 2010 July 1. At the end of the accounting year (2010 December 31), the market value for these shares was $ 7,360. By 2011 December 31, the market value had risen to $ 7,770. This stock is the only marketable equity security that Key Company owns. The company classifies the securities as available for sale securities. Give the entries necessary at the date of purchase and at 2010 December 31, and 2011.

On January 1, 2025, Vaughn Corporation purchased 20% of the common shares of Bramble Company for $196,000. During the year, Bramble earned net income of $77,000 and paid dividends of $19,250. Prepare the entries for Vaughn to record the purchase and any additional entries related to this investment in Bramble Company in 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.)

On January 4, 2018, Watts Co. purchased 40,000 shares (40%) of the common stock of Adams Corp., paying $800,000. There was no goodwill or other cost allocation associated with the investment. Watts has significant influence over Adams. During 2018, Adams reported income of $200,000 and paid dividends of $80,000. On January 2, 2019, Watts sold 5,000 shares  for  $125,000.  What  was  the balance in the investment account after the shares had been sold?

Pierson Corporation owned 10,000 shares of Hunter Corporation. These shares were purchased in 2011 for $90,000. On November 15, 2015, Pierson declared a property dividend of one share of Hunter for every ten shares of Pierson held by a stockholder. On that date, when the market price of Hunter was $28 per share, there were 90,000 shares of Pierson outstanding. What gain and net reduction in retained earnings would result from this property dividend? Gain = SWER Net reduction in R/E= 90,000+ 10x128= 9000 x 28 = 252 of $10 par value common stock outstand the market price of the st A

On January 2, 2018, Sanborn Tobacco Inc. bought 5% of Jackson Industry’s capital stock for $90 million. JacksonIndustry’s net income for the year ended December 31, 2018, was $120 million. The fair value of the shares heldby Sanborn was $98 million at December 31, 2018. During 2018, Jackson declared a dividend of $60 million.Required:1. Prepare all appropriate journal entries related to the investment during 2018.2. Assume that Sanborn sold the stock on January 2, 2019 for $110 million. Prepare the journal entry Sanbornwould use to record the sale