Equity Investments: Less than 20% ownership On September 12, 2,500 shares of Denver Company’s common stock are acquired at a price of $44 per share plus a $125 brokerage commission. On October 15, an $0.80-per-share dividend was received on the Denver Company stock. On November 10, 1,000 shares of the Denver Company stock were sold for $39 per share less a $50 brokerage commission. At the end of the accounting period on December 31, the fair value of the remaining 1,500 shares of Denver Company’s stock was $38 per share. Denver Company has 370,000 shares of common stock outstanding. Journalize the entries for the original purchase, dividend, sale, and change in fair value under the fair value method. If an amount box does not require an entry, leave it blank. Sep. 12 Investments-Denver Company Stock Investments-Denver Company Stock Cash Cash Oct. 15 Cash Cash Dividend Revenue Dividend Revenue Nov. 10 Cash Cash Loss on Sale of Investments Loss on Sale of Investments Investments-Denver Company Stock Investments-Denver Company Stock Dec. 31 Unrealized Gain on Equity Investments Unrealized Gain on Equity Investments Valuation Allowance for Equity Investments Valuation Allowance for Equity Investments

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 Investments: Less than 20% ownership

On September 12, 2,500 shares of Denver Company’s common stock are acquired at a price of $44 per share plus a $125 brokerage commission. On October 15, an $0.80-per-share dividend was received on the Denver Company stock. On November 10, 1,000 shares of the Denver Company stock were sold for $39 per share less a $50 brokerage commission. At the end of the accounting period on December 31, the fair value of the remaining 1,500 shares of Denver Company’s stock was $38 per share. Denver Company has 370,000 shares of common stock outstanding.

Journalize the entries for the original purchase, dividend, sale, and change in fair value under the fair value method. If an amount box does not require an entry, leave it blank.

Sep. 12	Investments-Denver Company Stock	Investments-Denver Company Stock
	Cash	Cash
Oct. 15	Cash	Cash
	Dividend Revenue	Dividend Revenue
Nov. 10	Cash	Cash
	Loss on Sale of Investments	Loss on Sale of Investments
	Investments-Denver Company Stock	Investments-Denver Company Stock
Dec. 31	Unrealized Gain on Equity Investments	Unrealized Gain on Equity Investments
	Valuation Allowance for Equity Investments	Valuation Allowance for Equity Investments

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