Cullumber Company acquired 28% of the outstanding common stock of Grinwold Inc. on January 1, 2020, by paying $1,555,400 for55,550 shares. Grinwold declared and paid a $0.50 per share cash dividend on June 30 and again on December 31, 2020. Grinwoldreported net income of $859,200 for the year.(a)Your Answer Correct AnswerPrepare the journal entries for Cullumber Company for 2020, assuming Cullumber cannot exercise significant influence overGrinwold. (Use the cost method.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually.Record journal entries in the order presented in the problem.)(b)Your answer is partially correct.DateJan. 1June 30Dec. 31SolutionList of AccountsJan. 1(c2)DateJune 30eTextbook and MediaDec. 31Dec. 31Account Titles and ExplanationVStock InvestmentsYour answer is correct.CashPrepare the journal entries for Cullumber Company for 2020, assuming Cullumber can exercise significant influence overGrinwold. (Use the equity method.) (Credit account titles are automatically indented when the amount is entered. Do not indentmanually. Record journal entries in the order presented in the problem.)CashcashStock InvestmentsStock InvestmentsAccount Titles and ExplanationSave for LaterStock InvestmentsRevenue from Stock InvestmentsCashCashStock InvestmentsStock Investments(To record dividends)List of AccountsStock InvestmentsStock InvestmentsDividend RevenueRevenue from Stock Investments(To record 28% equity)eTextbook and MediaList of AccountsRevenue From Stock InvestmentseTextbook and MediaCost MethodDebit$|||1555400DebitEquity Method277752777515554002777527775240576CreditShows in tabular form the account balances under each method at December 31, 2020. (Do not leave any answer field blank. Enter Ofor amounts.)CreditAttempts: 0 of 5 used1555427727715554002777527775240576Attempts: 1 of 5 usedSubmit Answer

The cost method adjust the investment on the basis of fair value of investment. The equity method…

Cullumber Company acquired 28% of the outstanding common stock of Grinwold Inc. on January 1, 2020, by paying $1,555,400 for 55,550 shares. Grinwold declared and paid a $0.50 per share cash dividend on June 30 and again on December 31, 2020. Grinwold reported net income of $859,200 for the year. (a) Your Answer Correct Answer Your answer is partially correct. Prepare the journal entries for Cullumber Company for 2020, assuming Cullumber cannot exercise significant influence over Grinwold. (Use the cost method.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Jan. 1 June 30 v Dec. 31 Account Titles and Explanation Stock Investments Cash Cash Stock Investments Stock Investments Revenue from Stock Investments Debit 1555400 27775 27775 Credit 15554 277 277

Cullumber Company acquired 28% of the outstanding common stock of Grinwold Inc. on January 1, 2020, by paying $1,555,400 for 55,550 shares. Grinwold declared and paid a $0.50 per share cash dividend on June 30 and again on December 31, 2020. Grinwold reported net income of $859,200 for the year. (a) Your Answer Correct Answer Your answer is partially correct. Prepare the journal entries for Cullumber Company for 2020, assuming Cullumber cannot exercise significant influence over Grinwold. (Use the cost method.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Jan. 1 June 30 v Dec. 31 Account Titles and Explanation Stock Investments Cash Cash Stock Investments Stock Investments Revenue from Stock Investments Debit 1555400 27775 27775 Credit 15554 277 277

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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