Assessing Impact of Dividends under FV-NI vs. Equity MethodsClark Inc. purchased 10% of the 10,000 shares of common stock in Nashville Inc. for $32,000 in January. Also, Shay Inc. purchased 35% of the 10,000 shares ofcommon stock in Nashville Inc. for $112,000 in January. In December, Nashville Inc. declared and paid a dividend of $0.80 per share on its outstanding shares ofcommon stock. For each investor, determine the dividend amount received, and its related impact on the Investment and Dividend Revenue accounts. Assumethat Shay Inc. (but not Clark Inc.) has significant influence over Nashville Inc.Note: Use a negative sign to indicate a decrease.DividendAmount Change in Increase inDeclared and Investment DividendReceivedAccountRevenueInvestorClark Inc. $Shay Inc. $Check‹ Previous$$Save Answers$$Next >

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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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Equity Method for Stock Investment On January 4, Year 1, Ferguson Company purchased 84,000 shares of Silva Company directly from one of the founders for a price of $51 per share. Silva has 300,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $227,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $755,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva. a. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1.
On February 22, Stewart Corporation acquired 7,500 shares of the 265,000 outstanding shares of Edwards Co. common stock at $39.85 plus commission charges of $1,125. On June 1, a cash dividend of S0.85 per share was received. On November 12, 2,500 shares were sold at $48 less commission charges of $300. In your computations, round per share amounts to two decimal places. When required, round final answers to the nearest dollar. a. Using the cost method, journalize the entry for the purchase of stock. Feb. 22 Investments-Edwards Co. Stock Cash
Equity Method for Stock Investment On January 4, Year 1, Ferguson Company purchased 64,000 shares of Silva Company directly from one of the founders for a price of $54 per share. Silva has 200,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $157,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $575,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva. a. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1. Year 1, Jan. 4 Year 1, July 2 Year 1, Dec. 31 b. Determine the December 31, Year 1, balance of Investment in Silva Company Stock.
Newly formed S&J Iron Corporation has 143,000 shares of $7 par common stock authorized. On March 1, Year 1, S&J Iron issued 12,000 shares of the stock for $10 per share. On May 2, the company issued an additional 23,500 shares for $22 per share. S&J Iron was not affected by other events during Year 1. Required a. Record the transactions in a horizontal statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If an element was not affected by the event, leave the cell blank. b. Determine the amount S&J Iron would report for common stock on the December 31, Year 1, balance sheet. c. Determine the amount S&J Iron would report for paid-in capital in excess of par. d. What is the total amount of capital contributed by the owners? e. What amount of total assets would S&J Iron report on the December 31, Year 1, balance sheet? Complete this question by entering your answers in the tabs below. Req A…
Entries for Stock Investments, Dividends, and Sale of Stock Seamus Industries Inc. buys and sells investments as part of its ongoing cash management. The following investment transactions were completed during the year: Feb. 24 Acquired 400 shares of Tett Co. stock for $157 per share plus a $124 brokerage commission. May 16 Acquired 1,600 shares of Issacson Co. stock for $35 per share plus a $160 commission. July 14 Sold 200 shares of Tett Co. stock for $174 per share less a $113 brokerage commission. Aug. 12 Sold 600 shares of Issacson Co. stock for $28 per share less a $87 brokerage commission. Oct. 31 Received dividends of $0.42 per share on Tett Co. stock. Journalize the entries for these transactions. In your computations, round per share amounts to two decimal places. When required, round final answers to the nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank. Feb. 24 May 16 July 14 Aug. 12
Equity MethodOn January 1, 2011, The Miller Corporation purchased 300,000 shares of The Mayfair Corporation for $5.7 million. The investment represented 35% of The Mayfair Corporation's outstanding common shares. During 2011, Mayfair reported net earnings of $2.25 million and paid a cash dividend of $0.15 per share. During 2012, Mayfair reported a net loss of $180,000 and again paid a dividend of $0.15 per share. Calculate the book value of Miller's investment in Mayfair as of December 31, 2011, and December 31, 2012. 2011 Answer 2012 Answer
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 Stock Investments, Dividends, and Sale of Stock Seamus Industries Inc. buys and sells investments as part of its ongoing cash management. The following investment transactions were completed during the year: Feb. 24 Acquired 2,000 shares of Tett Co. stock for $80 per share plus a $200 brokerage commission. May 16 Acquired 2,000 shares of Issacson Co. stock for $40 per share plus a $100 commission. July 14 Sold 500 shares of Tett Co. stock for $100 per share less a $50 brokerage commission. Aug. 12 Sold 1,000 shares of Issacson Co. stock for $34 per share less an $80 brokerage commission. Oct. 31 Received dividends of $0.30 per share on Tett Co. stock. Journalize the entries for these transactions under the fair value method. If an amount box does not require an entry, leave it blank. Feb. 24 Investments-Tett Co. Stock fill in the blank 2 fill in the blank 3 Cash fill in the blank 5 fill in the blank 6 May 16 Investments-Issacson Co. Stock fill…
Computing EPS: Simple Capital Structure and Net Loss Grace Corp. had 100,000 common shares outstanding as of January 1, and declared a 1-for-2 reverse stock split on March 31. In addition, the company bought 5,000 shares for the treasury on August 31, and 2,000 shares of stock were issued on November 1 in exchange for legal services. The company also had 1,000 shares of 5%, $10 par, cumulative, nonconvertible preferred stock outstanding for the year. No common or preferred stock dividends were declared during the year. The company suffered a net loss for the year of $100,000. Required Compute basic EPS. ⚫Note: Round weighted average common shares outstanding to the nearest whole number. •Note: Use a negative sign with a loss. Calculation of Weighted Shares Outstanding: Weighted Avg. Shares Inclusive Dates Outstanding Jan. - Mar. 100,000 x Apr. - Aug. 0 x Sept. - Oct. 0 x Nov. - Dec. 48,000 x 148000 Basic EPS $ Numerator (100,500) Denominator Per Share 48,000 x = $ -2.09
On January 1, Vermont Corporation had 36,300 shares of $9 par common stock issued and outstanding. All 36,300 shares had been issued in a prior period at $22 per share. On February 1, Vermont purchased 1,000 shares of treasury stock for $27 per share and later sold the treasury shares for $21 per share on March 1. The entry to journalize the purchase of the treasury shares on February 1 would include a O a. debit to a loss account for $5,000. b. credit to Treasury Stock for $27,000. c. credit to a gain account for $5,000. d. debit to Treasury Stock for $27,000.
Selected transactions completed by ATV Discount Corporation during the current fiscal year are as follows: Jan. Mar Apr. June Aug Oct Dec 5 Split the common stock 3 for 1 and reduced the par from $75 to $25 per share. After the split, there were 1,051,500 common shares outstanding 10 Purchased 41,200 shares of the corporation's own common stock at $27, recording the stock at cost. 30 Declared semiannual dividends of $0.90 on 71,600 shares of preferred stock and 50.13 on the common stock to stockholders of record on May 15, payable on June 15. Paid the cash dividends. Sold 28,500 shares of treasury stock at $34, receiving cash. 15 Declared semiannual dividends of $0.90 on the preferred stock and $0.13 on the common stock (before the stock dividend). In addition, a 3% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $38. The dividend date of record in November 15 payable on December 19. 19 Paid the cash…

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