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**Assessing Financial Statement Effects: Investments** On January 1, Ball Corporation purchased shares of Leftwich Company common stock. **(a)** Assume that the stock acquired by Ball represents 15% of Leftwich’s voting stock and that Ball has no influence over Leftwich’s business decisions. Use the financial statement effects template to record the following transactions: 1. Ball purchased 10,000 common shares of Leftwich at $15 cash per share. 2. Leftwich reported annual net income of $40,000. 3. Ball received a cash dividend of $1.20 per common share from Leftwich. 4. Year-end market price of Leftwich common stock is $19 per share. Use negative signs with your answers, when appropriate. | Transaction | Cash Asset | + | Noncash Assets | = | Liabilities | + | Contributed Capital | + | Earned Capital | |--------------|------------|---|----------------|---|-------------|---|---------------------|---|----------------| | (1) | | | | | | | | | | | (2) | | | | | | | | | | | (3) | | | | | | | | | | | (4) | | | | | | | | | | | Income Statement | |------------------| | Revenue - Expenses = Net Income | | | | (1) | | (2) | | (3) | | (4) | **(b)** Assume that the stock acquired by Ball represents 30% of Leftwich’s voting stock and that Ball accounts for this investment using the equity method since it is able to exert significant influence. Use the financial statement effects template to record the following transactions: 1. Ball purchased 10,000 common shares of Leftwich at $15 cash per share. 2. Leftwich reported annual net income of $40,000. 3. Ball received a cash dividend of $1.20 per common share from Leftwich. 4. Year-end market price of Leftwich common stock is $19 per share. Use negative signs with answers, when appropriate. | Transaction | Cash Asset | + | Noncash Assets | = | Liabilities | + | Contributed Capital | + |

**Assessing Financial Statement Effects: Investments** On January 1, Ball Corporation purchased shares of Leftwich Company common stock. **(a)** Assume that the stock acquired by Ball represents 15% of Leftwich’s voting stock and that Ball has no influence over Leftwich’s business decisions. Use the financial statement effects template to record the following transactions: 1. Ball purchased 10,000 common shares of Leftwich at $15 cash per share. 2. Leftwich reported annual net income of $40,000. 3. Ball received a cash dividend of $1.20 per common share from Leftwich. 4. Year-end market price of Leftwich common stock is $19 per share. Use negative signs with your answers, when appropriate. | Transaction | Cash Asset | + | Noncash Assets | = | Liabilities | + | Contributed Capital | + | Earned Capital | |--------------|------------|---|----------------|---|-------------|---|---------------------|---|----------------| | (1) | | | | | | | | | | | (2) | | | | | | | | | | | (3) | | | | | | | | | | | (4) | | | | | | | | | | | Income Statement | |------------------| | Revenue - Expenses = Net Income | | | | (1) | | (2) | | (3) | | (4) | **(b)** Assume that the stock acquired by Ball represents 30% of Leftwich’s voting stock and that Ball accounts for this investment using the equity method since it is able to exert significant influence. Use the financial statement effects template to record the following transactions: 1. Ball purchased 10,000 common shares of Leftwich at $15 cash per share. 2. Leftwich reported annual net income of $40,000. 3. Ball received a cash dividend of $1.20 per common share from Leftwich. 4. Year-end market price of Leftwich common stock is $19 per share. Use negative signs with answers, when appropriate. | Transaction | Cash Asset | + | Noncash Assets | = | Liabilities | + | Contributed Capital | + |

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Assessing Financial Statement Effects: Investments** On January 1, Ball Corporation purchased shares of Leftwich Company common stock. **(a)** Assume that the stock acquired by Ball represents 15% of Leftwich’s voting stock and that Ball has no influence over Leftwich’s business decisions. Use the financial statement effects template to record the following transactions: 1. Ball purchased 10,000 common shares of Leftwich at $15 cash per share. 2. Leftwich reported annual net income of $40,000. 3. Ball received a cash dividend of $1.20 per common share from Leftwich. 4. Year-end market price of Leftwich common stock is $19 per share. Use negative signs with your answers, when appropriate. | Transaction | Cash Asset | + | Noncash Assets | = | Liabilities | + | Contributed Capital | + | Earned Capital | |--------------|------------|---|----------------|---|-------------|---|---------------------|---|----------------| | (1) | | | | | | | | | | | (2) | | | | | | | | | | | (3) | | | | | | | | | | | (4) | | | | | | | | | | | Income Statement | |------------------| | Revenue - Expenses = Net Income | | | | (1) | | (2) | | (3) | | (4) | **(b)** Assume that the stock acquired by Ball represents 30% of Leftwich’s voting stock and that Ball accounts for this investment using the equity method since it is able to exert significant influence. Use the financial statement effects template to record the following transactions: 1. Ball purchased 10,000 common shares of Leftwich at $15 cash per share. 2. Leftwich reported annual net income of $40,000. 3. Ball received a cash dividend of $1.20 per common share from Leftwich. 4. Year-end market price of Leftwich common stock is $19 per share. Use negative signs with answers, when appropriate. | Transaction | Cash Asset | + | Noncash Assets | = | Liabilities | + | Contributed Capital | + |
Transcribed Image Text:**Assessing Financial Statement Effects: Investments** On January 1, Ball Corporation purchased shares of Leftwich Company common stock. **(a)** Assume that the stock acquired by Ball represents 15% of Leftwich’s voting stock and that Ball has no influence over Leftwich’s business decisions. Use the financial statement effects template to record the following transactions: 1. Ball purchased 10,000 common shares of Leftwich at $15 cash per share. 2. Leftwich reported annual net income of $40,000. 3. Ball received a cash dividend of $1.20 per common share from Leftwich. 4. Year-end market price of Leftwich common stock is $19 per share. Use negative signs with your answers, when appropriate. | Transaction | Cash Asset | + | Noncash Assets | = | Liabilities | + | Contributed Capital | + | Earned Capital | |--------------|------------|---|----------------|---|-------------|---|---------------------|---|----------------| | (1) | | | | | | | | | | | (2) | | | | | | | | | | | (3) | | | | | | | | | | | (4) | | | | | | | | | | | Income Statement | |------------------| | Revenue - Expenses = Net Income | | | | (1) | | (2) | | (3) | | (4) | **(b)** Assume that the stock acquired by Ball represents 30% of Leftwich’s voting stock and that Ball accounts for this investment using the equity method since it is able to exert significant influence. Use the financial statement effects template to record the following transactions: 1. Ball purchased 10,000 common shares of Leftwich at $15 cash per share. 2. Leftwich reported annual net income of $40,000. 3. Ball received a cash dividend of $1.20 per common share from Leftwich. 4. Year-end market price of Leftwich common stock is $19 per share. Use negative signs with answers, when appropriate. | Transaction | Cash Asset | + | Noncash Assets | = | Liabilities | + | Contributed Capital | + |
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