Harper, Incorporated, acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2023, for $365,700 in cash. The book value of Kinman's net assets on that date was $760,000, although one of the company's buildings, with a $71,200 carrying amount, was actually worth $111,450. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $114,000. Kinman sold inventory with an original cost of $65,100 to Harper during 2023 at a price of $93,000. Harper still held $22,800 (transfer price) of this amount in inventory as of December 31, 2023. These goods are to be sold to outside parties during 2024. Kinman reported a $43,600 net loss and a $27,500 other comprehensive loss for 2023. The company still manages to declare and pay a $5,000 cash dividend during the year. During 2024, Kinman reported a $56,400 net income and declared and paid a cash dividend of $7,000. It made additional inventory sales of $74,000 to Harper during the period. The original cost of the merchandise was $46,250. All but 30 percent of this inventory had been resold to outside parties by the end of the 2024 fiscal year. Required: Prepare all journal entries for Harper for 2023 and 2024 in connection with this investment. Assume that the equity method is applied. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. View transaction list View journal entry worksheet No 1 Date 01/01/2023 General Journal Investment in Kinman Company Cash Debit Credit 365,700 365,700 2 12/31/2023 Dividend receivable 2,000 Investment in Kinman Company 2,000 3 12/31/2023 Cash Dividend receivable 2,000 2,000 |、 、 、 、 4 12/31/2023 Equity in Investee income 17,440 Other comprehensive loss of Kinman Investment in Kinman Company 11,000 28,440 5 12/31/2023 Equity in Investee income Investment in Kinman Company 6 12/31/2023 7 8 Equity in Investee income Investment in Kinman Company 12/31/2024 Dividend receivable Investment in Kinman Company 12/31/2024 Cash Dividend receivable 12/31/2024 Investment in Kinman Company
Harper, Incorporated, acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2023, for $365,700 in cash. The book value of Kinman's net assets on that date was $760,000, although one of the company's buildings, with a $71,200 carrying amount, was actually worth $111,450. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $114,000. Kinman sold inventory with an original cost of $65,100 to Harper during 2023 at a price of $93,000. Harper still held $22,800 (transfer price) of this amount in inventory as of December 31, 2023. These goods are to be sold to outside parties during 2024. Kinman reported a $43,600 net loss and a $27,500 other comprehensive loss for 2023. The company still manages to declare and pay a $5,000 cash dividend during the year. During 2024, Kinman reported a $56,400 net income and declared and paid a cash dividend of $7,000. It made additional inventory sales of $74,000 to Harper during the period. The original cost of the merchandise was $46,250. All but 30 percent of this inventory had been resold to outside parties by the end of the 2024 fiscal year. Required: Prepare all journal entries for Harper for 2023 and 2024 in connection with this investment. Assume that the equity method is applied. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. View transaction list View journal entry worksheet No 1 Date 01/01/2023 General Journal Investment in Kinman Company Cash Debit Credit 365,700 365,700 2 12/31/2023 Dividend receivable 2,000 Investment in Kinman Company 2,000 3 12/31/2023 Cash Dividend receivable 2,000 2,000 |、 、 、 、 4 12/31/2023 Equity in Investee income 17,440 Other comprehensive loss of Kinman Investment in Kinman Company 11,000 28,440 5 12/31/2023 Equity in Investee income Investment in Kinman Company 6 12/31/2023 7 8 Equity in Investee income Investment in Kinman Company 12/31/2024 Dividend receivable Investment in Kinman Company 12/31/2024 Cash Dividend receivable 12/31/2024 Investment in Kinman Company
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Harper, Incorporated, acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2023, for $365,700 in
cash. The book value of Kinman's net assets on that date was $760,000, although one of the company's buildings, with a $71,200
carrying amount, was actually worth $111,450. This building had a 10-year remaining life. Kinman owned a royalty agreement with a
20-year remaining life that was undervalued by $114,000.
Kinman sold inventory with an original cost of $65,100 to Harper during 2023 at a price of $93,000. Harper still held $22,800
(transfer price) of this amount in inventory as of December 31, 2023. These goods are to be sold to outside parties during 2024.
Kinman reported a $43,600 net loss and a $27,500 other comprehensive loss for 2023. The company still manages to declare and
pay a $5,000 cash dividend during the year.
During 2024, Kinman reported a $56,400 net income and declared and paid a cash dividend of $7,000. It made additional
inventory sales of $74,000 to Harper during the period. The original cost of the merchandise was $46,250. All but 30 percent of
this inventory had been resold to outside parties by the end of the 2024 fiscal year.
Required:
Prepare all journal entries for Harper for 2023 and 2024 in connection with this investment. Assume that the equity method is
applied.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round
intermediate calculations.
View transaction list
View journal entry worksheet
No
1
Date
01/01/2023
General Journal
Investment in Kinman Company
Cash
Debit
Credit
365,700
365,700
2
12/31/2023
Dividend receivable
2,000
Investment in Kinman Company
2,000
3
12/31/2023
Cash
Dividend receivable
2,000
2,000
|、
、
、
、
4
12/31/2023
Equity in Investee income
17,440
Other comprehensive loss of Kinman
Investment in Kinman Company
11,000
28,440
5
12/31/2023
Equity in Investee income
Investment in Kinman Company
6
12/31/2023
7
8
Equity in Investee income
Investment in Kinman Company
12/31/2024
Dividend receivable
Investment in Kinman Company
12/31/2024
Cash
Dividend receivable
12/31/2024
Investment in Kinman Company
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