Accounting for debt and equity investments This problem continues the Canyon Canoe Company situation from Chapter 14. Amber Wilson is pleased with the growth of the business and has decided to invest its temporary excess cash in a brokerage account. The company had the following securi-ties transactions in 2019. Jul. 1 Purchased 8,000 shares in Adobe Outdoor Adventure Company for $3 per share. Canyon Canoe does not have significant influence over Adobe. Jul 7 Purchased 35% of the stock of Bison Backpacks consisting of 43,750 shares of stock (out of a total of 125,000 shares) for $5 per share. Canyon Canoe does have significant influence over Bison. Jul 10 Purchased a bond from Camelot Canoes with a face value of $80,000. Canyon Canoe intends to hold the bond to maturity. The bond pays interest semiannually on June 30 and December 31. Sep. 30 Received dividends of $0.15 per share from Adobe. Nov. 1 Received dividends of $0.30 per share from Bison. Dec. 31 Received an interest payment of $3,200 from Camelot Canoes. 31 Bison Backpacks reported net income of $30,000 for the year. 31 Adjusted the Adobe stock for a market value of $2.98 per share. Requirements 1. Journalize the transactions including any entries, if required, at December 31, 2019. 2. Determine the effect on Canyon Canoe Company’s net income for the year for each of the three investments
P15-25 Accounting for debt and equity investments
This problem continues the Canyon Canoe Company situation from Chapter 14. Amber Wilson is pleased with the growth of the business and has decided to invest its temporary excess cash in a brokerage account. The company had the following securi-ties transactions in 2019.
Jul. 1 Purchased 8,000 shares in Adobe Outdoor Adventure Company for $3 per share. Canyon Canoe does not have significant influence over Adobe.
Jul 7 Purchased 35% of the stock of Bison Backpacks consisting of 43,750 shares of stock (out of a total of 125,000 shares) for $5 per share. Canyon Canoe does have significant influence over Bison.
Jul 10 Purchased a bond from Camelot Canoes with a face value of $80,000. Canyon Canoe intends to hold the bond to maturity. The bond pays interest semiannually on June 30 and December 31.
Sep. 30 Received dividends of $0.15 per share from Adobe.
Nov. 1 Received dividends of $0.30 per share from Bison.
Dec. 31 Received an interest payment of $3,200 from Camelot Canoes.
31 Bison Backpacks reported net income of $30,000 for the year.
31 Adjusted the Adobe stock for a market value of $2.98 per share.
Requirements
1. Journalize the transactions including any entries, if required, at December 31, 2019.
2. Determine the effect on Canyon Canoe Company’s net income for the year for each of the three investments
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