Exam 3 - Practice Mastering Long-Term Assets & Inv-James McKenzie
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Exam 3 - Practice Mastering Long-Term Assets & Inv-James McKenzie
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28.
Student: James McKenzie
Date: 02/27/24
Instructor: ERICA Cannon
Course: ACCT-1120-702-Spring 2024
Assignment: Exam 3 - Practice Mastering
Long-Term Assets & Inv
Read the requirements .
1
Requirement 1.
Identify the appropriate accounting method for each of the following situations:
Situation
Accounting Method
a.
Investment in 35% of the investee company's stock of which the investor has significant
influence
Equity
b.
Available-for-sale debt investment
Fair value
c.
Investment in more than 50% of the investee company's stock
Consolidation
d.
Bond investment that matures in five years. The investor plans to hold the bond for the full
five years.
Amortized cost
Requirement 2. At what amount should the following trading investment portfolio be reported on the December 31, , balance sheet? Journalize any adjusting entry required on December 31.
2024
(Click the icon to review the trading investment portfolio.)
2
On the December 31, 2024 balance sheet, the total trading investment portfolio should be reported at
62,990
$
Journalize any adjusting entry required on December 31. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. If no entry is required, select "No entry required" on the first line of the Accounts and Explanations column and leave the remaining cells blank.)
Date
Accounts and Explanations
Debit
Credit
2024
Dec. 31
Unrealized Holding Loss—Trading
5,800
Fair Value Adjustment—Trading
5,800
Adjusted trading debt investments to market value.
Requirement 3. An investor paid on January 1, , to acquire % of , Inc.'s outstanding common stock. The investor had significant control of , Inc. For the year endind December 31, , 's net income was , and on June 14, the company declared and paid cash dividends of to all stockholders. Journalize the investor's transactions related to the investment: (a) purchase of the investment, (b) receipt of dividends, (c) investor's share of net income, and (d) sale of stock for on January 3, . (Record debits first, then credits. Select the explanation on the last line of the journal entry table. If no entry is required, select "No entry required" on the first line of the Accounts and Explanations column and leave the remaining cells blank.)
$74,700
2024
30
Longboard − Lady
Longboard − Lady
2024 Longboard − Lady
$130,000
$35,000
Longboard − Lady
Longboard − Lady
$105,700
2025
(a) Begin by journalizing the investor's purchase of the investment. An investor paid on January 1, , to acquire % of , Inc.'s outstanding common stock.
Longboard − Lady
$74,700
2024
30
Longboard − Lady
Date
Accounts and Explanations
Debit
Credit
2024
Equity Investments—Longboard-Lady, Inc.
74,700
(a) Jan. 1
Cash
74,700
Purchased investment in stock (equity method).
(b) Journalize the receipt of dividends. On June 14, declared and paid cash dividends of to all stockholders.
Longboard − Lady
$35,000
2/27/24, 11:06 PM
Exam 3 - Practice Mastering Long-Term Assets & Inv-James McKenzie
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1: Requirements
2: Data Table
Date
Accounts and Explanations
Debit
Credit
2024
Cash
10,500
(b) Jun. 14
Equity Investments—Longboard-Lady, Inc.
10,500
Received cash dividends (equity method).
(c) Journalize the investor's share of net income. During the first year, 's net income was .
Longboard − Lady
$130,000
Date
Accounts and Explanations
Debit
Credit
2024
Equity Investments—Longboard-Lady, Inc.
39,000
(c) Dec. 31
Revenue from Investments
39,000
Recorded revenue earned from investment (equity method).
(d) Journalize the sale of stock for on January 3, .
Longboard − Lady
$105,700
2025
Date
Accounts and Explanations
Debit
Credit
2025
Cash
105,700
(d) Jan. 3
Equity Investments—Longboard-Lady, Inc.
103,200
Gain on Disposal
2,500
Disposed of investment in stock (equity method).
1.
Identify the appropriate accounting method for each of the following situations:
a. Investment in % of the investee company's stock of which the investor has significant influence
35
b. Available-for-sale debt investment
c. Investment in more than 50% of the investee company's stock
d. Bond investment that matures in years. The investor plans to hold the bond for the full years.
five
five
2.
At what amount should the following trading debt investment portfolio be reported on the December 31, , balance sheet?
2024
Bond
Investment Cost
Current Market Value
Fuscia
6,500
$
7,200
$
Blond
58,400
49,600
Charcoal
3,890
6,190
Totals
68,790
$
62,990
$
Journalize any adjusting entry required on December 31.
3.
An investor paid on January 1, , to acquire % of , Inc.'s outstanding common stock. The investor had significant control of , Inc. For the year ending December 31, , 's net income was , and o
June 14, the company declared and paid cash dividends of to all stockholders. Journalize the investor's transactions related to the
investment: (a) purchase of the investment, (b) receipt of dividends, (c) investor's share of net income, and (d) sale of stock for on January 3, .
$74,700
2024
30
Longboard − Lady
Longboard − Lady
2024 Longboard − Lady
$130,000
$35,000
Longboard − Lady
Longboard − Lady
$105,700
2025
2/27/24, 11:06 PM
Exam 3 - Practice Mastering Long-Term Assets & Inv-James McKenzie
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3/3
Bond
Investment Cost
Current Market Value
Fuscia
6,500
$
7,200
$
Blond
58,400
49,600
Charcoal
3,890
6,190
Totals
68,790
$
62,990
$
YOU ANSWERED:
On the December 31, 2024 balance sheet, the total trading investment portfolio should be reported at
68790
Date
Accounts and Explanations
Debit
Credit
2024
Dec. 31
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
Date
Accounts and Explanations
Debit
Credit
2024
nothing
nothing
nothing
(a) Jan. 1
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
Date
Accounts and Explanations
Debit
Credit
2024
nothing
nothing
nothing
(b) Jun. 14
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
Date
Accounts and Explanations
Debit
Credit
2024
nothing
nothing
nothing
(c) Dec. 31
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
Date
Accounts and Explanations
Debit
Credit
2025
nothing
nothing
nothing
(d) Jan. 3
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
nothing
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Cancel
S2-10 Determine total manufacturing
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