(Equity Securities Entries) McElroy Company has the following portfolio of investment securities at September 30, 2020, its most recent reporting date. investment Securities Cost Fair Value Horton, Inc. common (5,000 shares) $215,000 $200,000 Monty, Inc. preferred (3,500 shares) 133,000 140,000 Oakwood Corp. common (1,000 shares) 180,000 179,000 On October 10, 2020, the Horton shares were sold at a price of $54 per share. In addition, 3,00 shares of Patriot common stock were acquired at S54.50 per share on November 2, 2020. The Decembe 31, 2020, fair values were Monty $106,000, Patriot $132,000, and Oakwood $193,000. Instructions Prepare the journal entries to record the sale, purchase, and adjusting entries related to the equity securities in the last quarter of 2020.

(Equity Securities Entries) McElroy Company has the following portfolio of investment securities at September 30, 2020, its most recent reporting date. investment Securities Cost Fair Value Horton, Inc. common (5,000 shares) $215,000 $200,000 Monty, Inc. preferred (3,500 shares) 133,000 140,000 Oakwood Corp. common (1,000 shares) 180,000 179,000 On October 10, 2020, the Horton shares were sold at a price of $54 per share. In addition, 3,00 shares of Patriot common stock were acquired at S54.50 per share on November 2, 2020. The Decembe 31, 2020, fair values were Monty $106,000, Patriot $132,000, and Oakwood $193,000. Instructions Prepare the journal entries to record the sale, purchase, and adjusting entries related to the equity securities in the last quarter of 2020.

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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Splish Corporation has outstanding 2,200 $1,000 bonds, each convertible into 50 shares of $10 par value common stock. The bonds are converted on December 31, 2020, when the unamortized discount is $24,000 and the market price of the stock is $21 per share.Record the conversion using the book value approach.
On December 21, 2020, Grouper Company provided you with the following information regarding its equity investments. December 31, 2020 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Clemson Corp. stock $21,600 $20,700 $(900 ) Colorado Co. stock 10,700 9,600 (1,100 ) Buffaloes Co. stock 21,600 22,200 600 Total of portfolio $53,900 $52,500 (1,400 ) Previous fair value adjustment balance 0 Fair value adjustment—Cr. $(1,400 ) During 2021, Colorado Co. stock was sold for $10,140. The fair value of the stock on December 31, 2021, was Clemson Corp. stock—$20,790; Buffaloes Co. stock—$22,110. None of the equity investments result in significant influence. (a) Prepare the adjusting journal entry needed on December 31, 2020. (b) Prepare the journal entry to record the sale of the Colorado Co. stock during 2021. (c) Prepare the adjusting journal entry needed on December 31,…
Eastern Corporation began operations on January 1st, 2020. The company reported the following information on its balance sheet as of December 31st, 2020: Liabilities Convertible bonds payable, $7,500,000, 5%, matures on Dec 31, 2025: $7,184,073 (See Note 1 below) Equity Common shares (unlimited authorized, 9,000,000 issued and outstanding). $18,000,000 Class A Preferred shares, cumulative $7 annual dividend, convertible to common shares at 4 common shares for each preferred share (400,000 authorized, 80,000 issued and outstanding) $3,000,000 Class B Preferred shares, non-cumulative $15 annual dividend, convertible to common shares at 2 common shares for each preferred share (4,000,000 authorized, 100,000 issued and outstanding) $750,000 Contributed surplus, common stock warrants for the purchase of common shares for $12 per share at any date before December 31st,…
During 2020, Maria Company purchased trading securities with the following cost and market value on December 31, 2020: Security Cost Market Value A - 1,000 shares 200,000 300,000 B - 10,000 shares 1,700,000 1,600,000 C - 20,000 shares 3,100,000 2,900,000 5,000,000 4,800,000 The entity sold 10,000 shares of Security B on January 27, 2021, for P150 per share. What amount should be reported as gain or loss on sale of trading investment in 2021?
SLC Corp. has the following portfolio of securities acquired for trading purposes and accounted for using the FV-NI model. SLC Inc. prepares financial statements every quarter. At Sept 30, 2021, the end of the company’s third quarter, the following information was reported: Investment Cost Fair Value 50,000 Common Shares – Seneca Inc. $215,000 $200,000 3,500 Preferred Shares – Loyalist Inc. $135,000 $140,000 2,000 Common Shares – Algonquin Inc. $180,000 $179,000 Transactions that occurred in the fourth quarter: Oct 8, 2021 The Seneca Shares were sold for $4.30 per share Nov 16, 2021 3,000 common shares of Humber Inc. were purchased at $44.50 per share SLC Inc. pays a 1% commission on purchase and sales of all securities. At the end of the fourth quarter, on December 31, 2021, the fair value of the shares were as follows: Investment Fair Value Loyalist Inc. $106,000 Algonquin Inc. $203,000 Humber Inc. $122,000 Instructions: Prepare the journal entries to record the sale, purchase and…
On December 31, 2019, VENUS Company had 450,000 shares of ordinary shares outstanding. On September 1, 2020, an additional 150,000 shares of ordinary shares were issued. In addition, VENUS Company had P 10,000,000 of 6% convertible bonds outstanding at December 31, 2019 which are convertible into 300,000 shares of ordinary shares. The carrying value of the bonds as of December 31, 2019 and based on a rate of 8% is P 9,205,800. No bonds were converted into ordinary shares in 2020. The net income for the year ended December 31, 2020 was P3,750,000. Using 30% income tax rate, how much should be the diluted EPS to be presented by VENUS Company for the year ended December 31, 2020?
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On December 31, 2020, Dreamer Company reported as Available-for-sale securities: AT Company, 5,000 shares of common stock (a 1% interest) P 125,000 ITS Company, 10,000 shares of common stock (a 2% interest) 160,000 Two Company, 25,000 shares of common stock (a 10% interest) 700,000 Marketable equity securities, at cost P 985,000 Less: Valuation allowance 50,000 Marketable equity securities, at market P 935,000 Additional information: · On May, 2021, AT Company issued a 10% stock dividend when the market price of its stock was P24 per share. · On November 1, 2021, AT Company paid a cash dividend of P0.75 per share. · On August 5, 2021, ITS Company issued to all shareholders, stock rights on the basis of one right per share. Market prices at date of issue were P13.50 per share (ex-right) of stock and P1.50 per rights. Dreamer Company sold all rights on December 16, 2021 for net proceeds of P18,800. · On July 1, 2021, Dreamer Company paid P1,520,000 for 50,000 additional shares of Two…
ABC Inc. has 3,600,000 ordinary shares outstanding on December 31, 2019. An additional 800,000 ordinary shares were issued on April 1, 2020, and 400,000 ordinary shares more on July 1, 2020. On October 1, 2020, ABC Inc. issued 20,000, P1,000 face value, 8% convertible bonds. Each bond is convertible into 20 ordinary shares. No bonds were converted into ordinary shares in 2020. What is the number of shares to be used in computing basic EPS and diluted EPS, respectively? * a.) 4,400,000 and 4,400,000 b.) 4,400,000 and 4,500,000 c.) 4,400,000 and 4,800,000 d.) 4,800,000 and 5,600,000 e.) answer not given
Oriole, Inc. had the following equity investment portfolio at January 1, 2020. Evers Company 970 shares @ $14 each $13,580 Rogers Company 910 shares @ $18 each 16,380 Chance Company 500 shares @ $9 each 4,500 Equity investments @ cost 34,460 Fair value adjustment (7,840 ) Equity investments @ fair value $26,620 During 2020, the following transactions took place. 1. On March 1, Rogers Company paid a $2 per share dividend. 2. On April 30, Oriole, Inc. sold 290 shares of Chance Company for $11 per share. 3. On May 15, Oriole, Inc. purchased 90 more shares of Evers Company stock at $17 per share. 4. At December 31, 2020, the stocks had the following price per share values: Evers $18, Rogers $17, and Chance $8. During 2021, the following transactions took place. 5. On February 1, Oriole, Inc. sold the remaining Chance shares for $8 per share. 6. On March 1, Rogers Company paid a $2 per share dividend.…
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