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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Entries for equity investments: less than 20% ownership Quan Corp. manufactures construction equipment. Journalize the entries to record the following selected equity investment transactions completed by Quan during a recent year using the fair value method. Feb. 2 Purchased for cash 3,100 shares of Celeste Inc.’s common stock for $32 per share plus a $124 brokerage commission. Celeste Inc. has 80,000 shares of common stock outstanding. Mar. 6 Received dividends of $0.45 per share on Celeste Inc. stock. June 7 Purchased 1,400 shares of Celeste Inc. stock for $38 per share plus a $56 brokerage commission. July 26 Sold 4,000 shares of Celeste Inc. stock for $41 per share less a $100 brokerage commission. Quan assumes that the first investments purchased are the first investments sold. Sept. 25 Received dividends of $0.62 per share on Celeste Inc. stock. Dec. 31 At the end of the accounting period, the fair value of the remaining 500 shares of Celeste Inc. stock was $20,720.…
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Entries for equity investments: less than 20% ownership On February 22, Triangle Corporation acquired 2,900 shares of the 100,000 outstanding common stock of Jupiter Co. at $23.80 plus commission charges of $580. On June 1, a cash dividend of $0.60 per share was received. On November 12, 1,000 shares were sold at $29 less commission charges of $120. At the end of the accounting period on December 31, the fair value of the remaining 1,900 shares of Jupiter Company’s stock was $24.50 per share. In your computations, round per share amounts to two decimal places. When required, round final answers to the nearest dollar. Question Content Area a. Using the cost method, journalize the entry for the purchase of stock. If an amount box does not require an entry, leave it blank. Feb. 22 Investments-Jupiter Co. Stock Investments-Jupiter Co. Stock Cash Cash Feedback Area Feedback Question Content Area b. Using the cost method, journalize the…
Treasury Stock Transactions Yard Spray Inc. develops and produces spraying equipment for lawn maintenance and industrial uses. On January 31 of the current year, Yard Spray Inc. reacquired 14,000 shares of its common stock at $34 per share. On June 14, 8,800 of the reacquired shares were sold at $37 per share, and on November 23, 3,400 of the reacquired shares were sold at $39. a. Journalize the transactions of January 31, June 14, and November 23. If an amount box does not require an entry, leave it blank. Jan. 31 June. 14. Nov. 23 b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the current year? $ c. What is the balance in Treasury Stock on December 31 of the current year? d. How will the balance in Treasury Stock be reported on the balance sheet?
Entries for Equity Investments: Less than 20% Ownership The following equity investment transactions were completed by Vintage Company during a recent year: Apr. 10. Purchased 11,000 shares of Delew Company’s common stock for a price of $60 per share plus a brokerage commission of $220. Delew Company has 250,000 shares of common stock outstanding. July 8. Received a quarterly dividend of $0.85 per share on the Delew Company investment. Sept. 10. Sold 3,000 shares for a price of $54 per share less a brokerage commission of $90. Dec. 31. At the end of the accounting period, the fair value of the remaining 8,000 shares of Delew Company’s stock was $59.90 per share. Journalize the entries for these transactions. If an amount box does not require an entry, leave it blank. If required, round the final answers to the nearest dollar.
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
Journalizing Equity Investment Transactions; less than 20% Ownership On January 23, 15,000 shares of Aurora Company's common stock are acquired at a price of $25 per share. On April 12, a $0.50-per-share dividend was received on the Aurora Company stock. On June 10, 6,000 shares of the Aurora Company stock were sold for $31 per share. At the end of the accounting period (December 31), the fair value of the remaining 9,000 shares of Aurora Company's stock was $30 per share. Aurora Company has 200,000 shares of common stock outstanding. Journalize the entries for the purchase of the stock, the receipt of the dividends, the sale of 6,000 shares, and the change in fair value. If an amount box does not require an entry, leave it blank. Jan. 23 Investments-Aurora Company Stock Cash ✓ Apr. 12 Cash Dividend Revenue ✓ Gain on Sale of Investments Investments-Aurora Company Stock June 10 Cash ✓ Dec. 31 Valuation Allowance for Equity Investments Unrealized Gain on Equity Investments Feedback…
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. $
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
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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