Equity Investments: Less than 20% ownership On September 12, 3,600 shares of Denver Company’s common stock are acquired at a price of $65 per share plus a $180 brokerage commission. On October 15, an $0.80-per-share dividend was received on the Denver Company stock. On November 10, 1,440 shares of the Denver Company stock were sold for $59 per share less a $72 brokerage commission. At the end of the accounting period on December 31, the fair value of the remaining 2,160 shares of Denver Company’s stock was $58 per share. Denver Company has 350,000 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 234,180 (Debit) Cash 234,180 (Credit) Oct. 15 Cash 2,880 (Debit) Dividend Revenue 2,880 (Credit) Nov. 10 Cash 84,888 (Debit) Loss on Sale of Investments 8,784 (Debit) Investments-Denver Company Stock 93,672 (Credit) Dec. 31 Unrealized Loss on Equity Investments ????? Valuation Allowance for Equity Investments ????? Dec. 31 (What is the correct answer for Unrealized Loss on Equity Investments and Valuation Allowance for Equity Investments?) What is credited or debted? I have tried working it out and I keep getting the answers wrong.

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, 3,600 shares of Denver Company’s common stock are acquired at a price of $65 per share plus a $180 brokerage commission. On October 15, an $0.80-per-share dividend was received on the Denver Company stock. On November 10, 1,440 shares of the Denver Company stock were sold for $59 per share less a $72 brokerage commission. At the end of the accounting period on December 31, the fair value of the remaining 2,160 shares of Denver Company’s stock was $58 per share. Denver Company has 350,000 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	234,180 (Debit)
	Cash	234,180 (Credit)
Oct. 15	Cash	2,880 (Debit)
	Dividend Revenue	2,880 (Credit)
Nov. 10	Cash	84,888 (Debit)
	Loss on Sale of Investments	8,784 (Debit)
	Investments-Denver Company Stock	93,672 (Credit)
Dec. 31	Unrealized Loss on Equity Investments	?????
	Valuation Allowance for Equity Investments	?????

Dec. 31 (What is the correct answer for Unrealized Loss on Equity Investments and Valuation Allowance for Equity Investments?) What is credited or debted? I have tried working it out and I keep getting the answers wrong.

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