Financial and Managerial Accounting - CengageNow
15th Edition
ISBN: 9781337911979
Author: WARREN
Publisher: CENGAGE L
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Chapter D, Problem 7E
(a)
To determine
Journalize the stock investment transactions for Company S, under the equity method.
(b)
To determine
Determine the balance of the investment-Company F stock account, as of December 31, 20Y6.
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On January 4, 20Y6, Spandella Company purchased 160,000 shares of Filington Company directly from one of the founders for a price of $30 per share. Filington has 400,000 shares outstanding, including the Spandella shares. On July 2, 20Y6, Filington paid $600,000 in total dividends to its shareholders. On December 31, 20Y6, Filington reported a net income of $1,200,000 for the year. Spandella uses the equity method in accounting for its investment in Filington.
a. Journalize the Spandella Inc. entries for the transactions involving its investment in Filington Company during 20Y6.
20Y6 Jan. 4
20Y6 July 2
20Y6 Dec. 31
b. Determine the December 31, 20Y6, balance of the investment in Filington Company stock account.
On January 4, Year 1, Barber Company purchased 13,500 shares of Convell Company for $162,000. Convell Company has a total of 67,500 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.75 per share, and its net income was $123,000 and $118,000 for Year 1 and Year 2 , respectively. The January 2, Year 3, entry to record Barber's sale of 8,100 shares of Convell Company stock, which represents 60% of Barber's total investment, for $109,350 cash, should be: Multiple Choice Debit Cash $109,350; debit Loss on Sale of Stock Investment $9,510; credit Equity Method Investments $99,840. Debit Cash $109,350; credit Gain on Sale of Stock Investment $20,250; credit Equity Method Investments $89,100. Debit Cash $109,350; debit Loss on Sale of Stock Investment $57,050; credit Equity Method Investments $162,000. Debit Cash $109,350; debit Loss on Sale of…
On January 2, Year 1, Barber Company purchased 6,100 shares of Convell Company for $71.720. Convell Company has a total of
30,500 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over
Convell. During each of the next two years, Convell declared and paid cash dividends of $0.85 per share, and its net income was
$83,000 and $78,000 for Year 1 and Year 2, respectively. What is the book value of Barber's investment in Convell at the end of
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Multiple Choice
S61.350.
$102.920.
Chapter D Solutions
Financial and Managerial Accounting - CengageNow
Ch. D - Prob. 1ECh. D - Prob. 2ECh. D - Starks Products uses the cost method to account...Ch. D - Prob. 4ECh. D - Prob. 5ECh. D - Prob. 6ECh. D - Prob. 7ECh. D - On January 1, 20Y9, Valuation Allowance for...Ch. D - The investments of Charger Inc. include a single...Ch. D - Jets Bancorp Inc. purchased a portfolio of trading...
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