Ayayai Corporation purchased 420 shares of Sherman Inc. common stock for $12,300 (Ayayai does not have significant influence).During the year, Sherman paid a cash dividend of $3.50 per share. At year-end, Sherman stock was selling for $31.50 per share.Prepare Ayayai's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair valueadjustment. (Assume a zero balance in the Fair Value Adjustment account.) (Credit account titles are automatically indented when amountis entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)No. Account Titles and Explanation(a)(b)(c)DebitCredit

FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOMEFair value through Other Comprehensive Income (FVOCI)…

Answered: Ayayai Corporation purchased 420 shares…

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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Carlsville Company began operations in the current year and had no prior stock investments. The following transactions are from its short-term stock investments with insignificant influence. Prepare journal entries to record these transactions. On December 31, prepare the adjusting entry to record the fair value adjustment for the portfolio of stock investments. July 22 Purchased 1, 500 shares of Hunt Corporation at $23 per share. September 5 Received a $2 cash dividend for each share of Hunt Corporation. September 27 Purchased 3, 400 shares of HCA at $21 per share. October 3 Sold 1,500 shares of Hunt at $18 per share. October 30 Purchased 1,300 shares of Black & Decker at $53 per share. December 17 Received a $3 cash dividend for each share of Black & Decker. December 31 Fair value of the short-term stock investments is $143,000.
On February 1. Mini Company purchased 1.000 shares (2% ownership) of Win Company common stock for $30 per share. The shares are classified as a short-term investment. On March 20, Mini Company sold 200 shares of Win stock for $5,800. Mini received a dividend of $1 per share on April 25. The fair value of the remaining stock is $26,400 on June 30. The entry to record the appropriate fair value adjustment on June 30 would include a debit to O Urealzed Gain or Lass - Income in the amount of $2,400. 57 167 points O Fair Value Adjustment -Stock in the amount of $2.400. O Unrealized Gain or Loss -Income in the amount of $3,600. O No gain or loss should be recorded because no adlitional shares were sold on June 30. 58 L66 points The Norfolk Pine Co purchased 10.000 shares of Peperomia Ginny, Inc. on July 1 at a cost of $18 per share. On December 1, Norfolk Pine sells 600 shares at a price of $20 per share. Norfolk Pine's entry to record this transaction will include a 0 debit to Common Stock…
Cayuga Meadows purchased 42,000 shares of common stock of Long Corporation as a long-term investment for $1,000,000. During the year, Long Corporation reported net income of $500,000 Paid dividends of $200,000. Instructions: Assuming this purchase represents a 25% interest, prepare all the journal entries required for the year.
Subject: acounting
Concord Corporation purchased 360 shares of Sherman Inc. common stock for $11,900 (Concord does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $37.50 per share. Prepare Concord' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit (a) (b) (c)
On January 1, 2025, Ayayai Corporation purchased 40% of the common shares of Pina Company for $178,000. During the year, Pina earned net income of $86,000 and paid dividends of $21,500. Prepare the entries for Ayayai to record the purchase and any additional entries related to this investment in Pina Company in 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation (To record purchase of stock.) (To record receipt of dividends.) (To record revenue.) Debit Credit ION
Indigo Corporation purchased 370 shares of Sherman Inc. common stock for $13,100 (Indigo does not have significant influence). During the year, Sherman paid a cash dividend of $3.00 per share. At year-end, Sherman stock was selling for $37.50 per share. Assume the stock is nonmarketable. Prepare Indigo's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.)
Lauralee, Inc. owns a 30% interest in Eastwood Co., giving it representation on the investee’s board of directors. At the beginning of the year, the Equity Investment was carried on Lauralee’s balance sheet at $500,000. During the year, Eastwood reported net income of $250,000 and paid Lauralee a dividend of $50,000. In addition, Lauralee sold inventory to Eastwood, recording a gross profit of $20,000 on the sale. At the end of the year, 50% of the merchandise remained unsold by Eastwood. Required: a. Prepare the equity method journal entry to defer the unrealized inventory gross profit.b. How much equity income should Lauralee report from Eastwood during the year?c. What is the balance in the Equity Investment at the end of the year?
Godo
Rowan Co. purchases 100 common shares (40%) of JBI Corp. as a long-term investment for $500,000 cash on July 1. JBI paid $5,000 in total cash dividends on November 1 and reported net income of $100,000 for the year. Prepare Rowan’s entries to record (1) the purchase of JBI shares, (2) the receipt of its share of JBI dividends, and (3) the December 31 year-end adjustment for its share of JBI net income.
Assume all investments are short-term and readily marketable. The following transactions occurred. June 2; purchased 300 shares of Beaty Corporation common stock for $45 per share; July 1; purchased 200 Meng Corporation bonds for $220,000; July 30; received a cash dividend of $2 per share from Beaty Corporation; September 15; sold 90 shares of Beaty Corporation stock for $50 per share; December 31; received semiannual interest check for $11,000 from Meng Corporation December 31; received a cash dividends of $2 per share from Beaty Corporation. Instructions: journalize the transactions.
On January 2, Cohan Company acquired 42% of the outstanding stock of Sanger Company for $552,500. For the year ended December 31, Sanger Company earned income of $135,100 and paid dividends of $20,700. Prepare the entries for Cohan Company for the purchase of the stock, the share of Sanger income, and the dividends received from Sanger Company. Refer to the Chart of Accounts for exact wording of account titles.

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