Problem 2-Equity Investments: 20% - 50% Ownership On January 2, 20Y4, Jasmine Company acquired 42% of the outstanding stock of Golden Sun Company for $300,000. For the year ended December 31, 20Y4 Jasmine Company earned income of $180,000 and paid dividends of $35,000. On January 31, 20Y5, Jasmine Company sold all of its investment in Golden Sun Company stock for $350,000. Journalize the entries for Jasmine Company for the purchase of the stock, the share of Jasmine income, the dividends received from Jasmine Company, and the sale of the Jasmine Company stock.
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- Equity investments: 20%-50% ownership On January 2, 20Y4, Whitworth Company acquired 28% of the outstanding stock of Aloof Company for $350,000. For the year ended December 31, 20Y4, Aloof Company earned income of $91,000 and paid dividends of $28,000. On January 31 20Y5, Whitworth Company sold all of its investment in Aloof Company stock for $365,640. Journalize the ehtries for Whitworth Company for the purchase of the stock, the share of Aloof income, the dividends received from Aloof Company, and the sale of the Aloof Company stock. If an amount box does not require an entry, leave it blank. Jan. 2, 20Y4 - Purchase Dec. 31, 20Y4 Income Dec. 31, 20Y4 - Dividends Jan. 31, 20Y5 - SaleEquity investments: 20%-50% ownership On January 2, 20Y4, Whitworth Company acquired 30% of the outstanding stock of Aloof Company for $310,000. For the year ended December 31, 20Y4, Aloof Company earned income of $81,000 and paid dividends of $25,000. On January 31 20Y5, Whitworth Company sold all of its investment in Aloof Company stock for $324,300. Journalize the entries for Whitworth Company for the purchase of the stock, the share of Aloof income, the dividends received from Aloof Company, and the sale of the Aloof Company stock. If an amount box does not require an entry, leave it blank. Jan. 2, 20Y4 - Purchase Dec. 31, 20Y4 - Income Dec. 31, 20Y4 - Dividends Jan. 31, 20Y5 - SaleJournalizing equity investment transactions; 20%-50% ownership On January 2, 20Y4, Whitworth Company acquired 40% of the outstanding stock of Aloof Company for $320,000. For the year ended December 31, 20Y4, Aloof Company earned income of $180,000 and paid dividends of $12,000. On January 31, 20Y5, Whitworth Company sold all of its investment in Aloof Company stock for $385,200. Journalize the entries for Whitworth Company for the purchase of the stock, the share of Aloof income, the dividends received from Aloof Company, and the sale of the Aloof Company stock. If an amount box does not require an entry, leave it blank. 20Y4 Jan. 2 20Y4 Dec. 31 20Y4 Dec. 31 20Y5 Jan. 31
- Equity investments: 20%–50% ownership On January 2, 20Y4, Whitworth Company acquired 35% of the outstanding stock of Aloof Company for $290,000. For the year ended December 31, 20Y4, Aloof Company earned income of $75,000 and paid dividends of $23,000. On January 31 20Y5, Whitworth Company sold all of its investment in Aloof Company stock for $306,200. Journalize the entries for Whitworth Company for the purchase of the stock, the share of Aloof income, the dividends received from Aloof Company, and the sale of the Aloof Company stock. If an amount box does not require an entry, leave it blank. Jan. 2, 20Y4 - Purchase Investment in Aloof Company Stock Investment in Aloof Company Stock Cash Cash Dec. 31, 20Y4 - Income Investment in Aloof Company Stock Investment in Aloof Company Stock Income of Aloof Company Income of Aloof Company Dec. 31, 20Y4 - Dividends Cash Cash Investment in Aloof Company Stock Investment in Aloof Company Stock…Entries for equity investments: 20%-50% ownership On January 4, 20Y4, Ferguson Company purchased 122,500 shares of Silva Company's common stock directly from one of the founders for a price of $37 per share. Silva has 350,000 shares outstanding, including the Daniels shares. On July 2, 20Y4, Silva paid $355,000 in total dividends to its shareholders. On December 31, 20Y4, Silva reported a net income of $1,125,000 for the year. a. Journalize the Ferguson Company entries for the transactions involving its investment in Silva Company during 20Y4. If an amount box does not require an entry, leave it blank. 20Y4, Jan. 4 20Y4, July 2 20Y4, Dec. 31 b. Determine the December 31, 20Y4, balance of Investment in Silva Company Stock. $Entries for equity investments: 20%-50% ownership At a total cost of $1,104,000, Herrera Corporation acquired 96,000 shares of Tran Corp. common stock as a long-term investment. Tran Corp. has 300,000 shares of common stock outstanding, Induding the shares acquired by Herrera Corporation. a. Journalize the entries by Herrera Corporation to record the following information: If an amount box does not require an entry, leave it blank. 1. Tran Corp. reports net income of $1,990,000 for the current period. 88 2. A cash dividend of $1.10 per common share is paid by Tran Corp. during the current period. b. Why is the equity method appropriate for the Tran Corp. investment? An investment amount of the outstanding common stock of the investee is presumed to represent significant influence. The equity method is appropriate when the investor exercise significant influence over the investee.
- Entries for equity investments: 20%–50% ownership At a total cost of $5,600,000, Herrera Corporation acquired 280,000 shares of Tran Corp. common stock as a long-term investment. Tran Corp. has 800,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. a. Journalize the entries by Herrera Corporation to record the following information: If an amount box does not require an entry, leave it blank. Question Content Area 1. Tran Corp. reports net income of $600,000 for the current period. blank - Select - - Select - - Select - - Select - Question Content Area 2. A cash dividend of $0.50 per common share is paid by Tran Corp. during the current period. blank - Select - - Select - - Select - - Select - Question Content Area b. Why is the equity method appropriate for the Tran Corp. investment? An investment amount of the outstanding common stock of the investee is presumed to…Entries for equity investment of between 20%-50% ownership Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, 20Y3. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31, 20Y3: 20Y3 Jan. 25 Purchased 56,000 shares of Helsi Co. common stock for $760,000. There are 160,000 shares of Helsi Co. stock outstanding. Dec. 31 Received $23,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $95,000 in 20Y3. Required: 1. Journalize the entries to record the preceding transactions. If an amount box does not require an entry, leave it blank. Date Description Debit Credit 20Y3 Jan. 25 Investment in Helsi Co. Stock Cash Dec. 31-Dividends Cash Investment in Helsi Co. Stock Dec. 31-Income Investment in Helsi Co. Stock Income of Helsi Co. II II IIEntries for equity investment of between 20%–50% ownership Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, 20Y3. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31, 20Y3: 20Y3 Jan. 25 Purchased 44,000 shares of Helsi Co. common stock for $760,000. There are 110,000 shares of Helsi Co. stock outstanding. Dec. 31 Received $23,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $95,000 in 20Y3. Required: 1. Journalize the entries to record the preceding transactions. If an amount box does not require an entry, leave it blank. 2. Should Glacier Product Inc.’s investment in Helsi Co. be reported at fair value on its financial statements for the year ending December 31, 20Y3?
- Entries for equity investments: 20%–50% ownership On January 4, 20Y4, Ferguson Company purchased 480,000 shares of Silva Company’s common stock directly from one of the founders for a price of $30 per share. Silva has 1,200,000 shares outstanding, including the Daniels shares. On July 2, 20Y4, Silva paid $750,000 in total dividends to its shareholders. On December 31, 20Y4, Silva reported a net income of $2,000,000 for the year. Question Content Area a. Journalize the Ferguson Company entries for the transactions involving its investment in Silva Company during 20Y4. If an amount box does not require an entry, leave it blank. 20Y4, Jan. 4 - Select - - Select - - Select - - Select - 20Y4, July 2 - Select - - Select - - Select - - Select - 20Y4, Dec. 31 - Select - - Select - - Select - - Select - Question Content Area b. Determine the December 31, 20Y4, balance of the investment in Silva Company stock account.$fill in…Entries for equity investments: 20%-50% ownership On January 6, 20Y8, Bulldog Co. purchased 26% of the outstanding common stock of $119,000. Gator Co. paid total dividends of $13,100 to all shareholders on June 30, 20Y8. Gator had a net loss of $23,800 for 20Y8. a. Journalize Bulldog's purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gator Co. stock. Jan. 6 - Purchase June 30 - Dividend Dec. 31 - Equity Loss b. Compute the balance of Investment in Gator Co. Stock on December 31, 20Y8. $4 c. How does valuing an investment under the equity method differ from valuing an investment at fair value? Under the method, the investor will record their proportionate share of the net increase (or decrease) of the book value of the investee resulting from earnings and dividend distributions. The method uses market price information to value the investment in the investee.Entries for equity investments: 20%–50% ownership On January 4, 20Y4, Ferguson Company purchased 100,000 shares of Silva Company's common stock directly from one of the founders for a price of $51 per share. Silva has 400,000 shares outstanding, including the Daniels shares. On July 2, 20Y4, Silva paid $270,000 in total dividends to its shareholders. On December 31, 20Y4, Silva reported a net income of $934,000 for the year. Question Content Area a. Journalize the Ferguson Company entries for the transactions involving its investment in Silva Company during 20Y4. If an amount box does not require an entry, leave it blank. 20Y4, Jan. 4 - Select - - Select - - Select - - Select - 20Y4, July 2 - Select - - Select - - Select - - Select - 20Y4, Dec. 31 - Select - - Select - - Select - - Select - Question Content Area b. Determine the December 31, 20Y4, balance of Investment in Silva Company Stock.$fill in the blank…
