Heidebrecht Design acquired 25% of the outstanding common stock of Sunland Company on January 1, 2022, by paying $854,000 for the 42,700 shares. Sunland declared and paid $0.30 per share cash dividends on March 15, June 15, September 15, and December 15, 2022. Sunland reported net income of $390,500 for the year. At December 31, 2022, the market price of Sunland common stock was $26 per share. (a) Prepare the journal entries for Heidebrecht Design for 2022 assuming Heidebrecht Design cannot exercise significant influence over Sunland. (Use the cost method.) (Record journal entries in the order presented in the problem. List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation

Heidebrecht Design acquired 25% of the outstanding common stock of Sunland Company on January 1, 2022, by paying $854,000 for the 42,700 shares. Sunland declared and paid $0.30 per share cash dividends on March 15, June 15, September 15, and December 15, 2022. Sunland reported net income of $390,500 for the year. At December 31, 2022, the market price of Sunland common stock was $26 per share. (a) Prepare the journal entries for Heidebrecht Design for 2022 assuming Heidebrecht Design cannot exercise significant influence over Sunland. (Use the cost method.) (Record journal entries in the order presented in the problem. List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Required: 1. Prepare all appropriate journal entries related to the investment during 2024. Note: If…

A: The company can invest in shares of another company and it is generally accounted for using equity…

Q: Pharoah Co. acquired 25% of the 530,000 shares of outstanding common stock of Bloom Inc. on December…

A: Journal entryThe transactions that a company goes through in its day-to-day activities are recorded…

Q: On July 1, 2021, Tremen Corporation acquired 40% of the shares of Delany Company. Tremen paid…

A: The share and security acquired by the business entity are classified as assets. The ending balance…

Q: On January 1, 2020 GGB ltd. Had 2,500,000 Class A common shares outstanding. On April 1, the company…

A: Earning per share is the calculation of the earnings of the company attributable to each share of…

Q: An investor company purchased 42,000 of the 100,000 outstanding shares of the investee company's…

A: Equity method is a method of accounting for investments. This method is used when investor has…

Q: Early in its 2023 fiscal year (December 31 year end). Whispering Winds Company purchased 10,700…

A: If an organization opts to record investments under FV-OCI (Fair Value - Other Comprehensive…

Q: The Parent Company purchased common stock of Sub Company in a series of open-market purchases in…

A: INTRODUCTION: Common stock is what most people see when they consider "stock." All of the shares in…

Q: On November 16, 2027, XYZ Company purchased 17,000 shares (representing 12%) of Company C stock for…

A: Unrealized losses are losses that have not yet been liquidated but whose value has decreased. When a…

Q: Toy Co Corporation purchased 282,000 of the 940,000 common shares of Abacus Ltd. on October 1, 2021,…

A: The Significant influence refers to the opportunity to participate in the formulation of an entity's…

Q: On January 1, 2020, Pail Corporation acquired 75 percent of Sand Company's common stock for $525,000…

A: The question is related to Consolidated Financial Statements.The details of dividend paid by Parent…

Q: On January 15, 2020 bieber co purchased 30,000 shares of Hand Co. at $35 per share, paying $10,000…

A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…

Q: On January 1, 2024, Cat Company purchased the following investments: 1) 20,000 shares (representing…

A: Introduction: If an investor company makes an investment between 20 to 50% in the investee company…

Q: On January 1, 2023, EE Company acquired 70,000 shares, representing 20% of the outstanding shares of…

A: The objective of the question is to determine how EE Company should report its investment in WW…

Q: Jaycie Phelps Inc. acquired 25% of the outstanding common stock of Theresa Kulikowski Inc. on…

A: Let's address the requirements step by step:1. Amount of Equity Investments (Kulikowski) at December…

Q: Sarasota Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December…

A: Solution- Journal entries for Sarasota inc for 2020 and 2021 Assuming that Sarasota can not…

Q: Indigo Cosmetics acquired 10% of the 193,000 shares of common stock of Martinez Fashion at a total…

A: Method of recording financial transactions in the book of original entry by debiting and crediting…

Q: M.T. Glass, Inc. purchased the following investments on January 1, 2028: 1. 21,000 shares…

A: Introduction:If an investor company makes an investment between 20 to 50% in the investee company…

Q: On November 1, 2020, Drucker Co. acquired the following investments in equity securities measured at…

A: d. Journal entries are as follows:

Q: Waterway Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December…

A: Cash dividend=Number of shares×Per share dividend=46,800×$0.90=$42,120

Q: Clark Company acquired 15% of the 500,000 shares of common stock of Davis Company at a total cost of…

A: When something happens in a business and it can be quantified and stated in monetary terms, it…

Q: On January 18, 2020, Ehrlich Company purchased 40,000 shares (10%) of common stock of Portal…

A: Disclaimer: "Since you have asked multiple questions, we will solve the first three questions for…

Q: On May 1, 2020, Clarke Inc. acquired 1,250 shares of Mayson Ltd. for $75,000. This investment…

A: Acquisition refers to owning a significant part of shares in another company. It does not mean the…

Q: On March 22, 2023, Amelia, Inc., purchased 500 shares of its own common stock in the market for $21…

A: Treasury stock are shares that were repurchased by a company in a share buyback.Purchase of treasury…

Q: value and the fair value of John's net assets were $12.900.000 On July 1, 2026 Riverbed paid…

A: Accounting for investments is the process of systematically recording and reporting financial…

Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Heidebrecht Design acquired 25% of the outstanding common stock of Sunland Company on January 1, 2022, by paying $854,000 for
the 42,700 shares. Sunland declared and paid $0.30 per share cash dividends on March 15, June 15, September 15, and December 15,
2022. Sunland reported net income of $390,500 for the year. At December 31, 2022, the market price of Sunland common stock was
$26 per share.
(a)
Prepare the journal entries for Heidebrecht Design for 2022 assuming Heidebrecht Design cannot exercise significant influence
over Sunland. (Use the cost method.) (Record journal entries in the order presented in the problem. List all debit entries before credit
entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No
entry" for the account titles and enter O for the amounts.)
Date
Account Titles and Explanation
Debit
Credit

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Meaning

VIEW

Step 2: Preparation of journal

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

On July 1, 2020, Selig Company purchased for cash 30% of the outstanding common stock of Spoor Corporation. Both Selig and Spoor have a December 31 year-end. Spoor Corporation, whose common stock is actively traded on the NASDAQ exchange, paid a cash dividend on November 15, 2020, to Selig Company and its other stockholders. It also reported its total net income for the year of $920,000 to Selig Company. Instructions Prepare a one-page memorandum of instructions on how Selig Company should report the above facts in its December 31, 2020, balance sheet and its 2020 income statement. In your memo, identify and describe the method of valuation you recommend. Provide rationale where you can. Address your memo to the chief accountant at Selig Company.
On January 25, 2023, Martin Ltd. purchased 5,000 common shares of NBC (National Bank of Canada) for $30 each. During the remainder of 2023, Martin received $1.60/share in dividends and NBC's earnings per share were $4.50. The closing price of the shares on the fiscal year-end date of December 31, 2023, was $31. Required Assume that Martin classified the investment as FVPL. a. At what value should the company report the NBC shares on its December 31, 2023, balance sheet? b. How much income should the company report in relation to these shares? c. How much other comprehensive income (OCI) should Martin report in relation to these shares? Requirement a. Assume that Martin classified the investment as FVPL. At what value should the company report the NBC shares on its December 31, 2023, balance sheet? The company should report the NBC shares at per share for a total of $ at December 31, 2023. Requirement b. Assume that Martin classified the investment as FVPL. How much income should the co
Novak Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,214,400 for 52,800 shares. Kulikowski Inc. declared and paid an $0.80 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $768,000 for 2021. The fair value of Kulikowski’s stock was $26 per share at December 31, 2021. Assume that the security is a trading security. At what amount is the investment in securities reported on the balance sheet under each of these methods at December 31, 2021? What is the total net income reported in 2021 under each of these methods? Fair Value Method Equity Method Investment amount (balance sheet) $ $ Dividend revenue (income statement) Unrealized holding gain (income statement) Investment income (income statement)
On April 1, 2024, Sunland Company purchased 44,800 common shares in Ecotown Ltd. for $13 per share. Management has designated the investment as FVTOCI. On December 5, Ecotown paid dividends of $0.10 per share and its shares were trading at $15 per share on December 31. Prepare the required entries to record the purchase, dividends, and year-end adjusting journal entry (if any) for this investment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date Account Titles く Debit Credit
On January 1, 2021, PingPing Corp. acquired all the assets and liabilities of Willy Corp. by issuing shares of P10 par value ordinary shares. PingPing Corp. shares has a market value of P40 per share. The statement of financial position of Willy Corp. as of January 1, 2021, is as follows: Current assets – P640,000; Equipment – P1,760,000; Liabilities – P800,000; Common shares (P4 par) – P160,000; Share premium – P640,000; Retained earnings – P800,000. The current assets and equipment have fair values of P800,000 and P3,200,000, respectively. PinPing Corp. issued sufficient number of shares so that the fair market values of the shares issued is equal to the fair market value of Willy Corp.’s net assets. How many ordinary shares should PingPing Corp. must issue to have a gain on bargain purchase of P200,000? *... a. 85,000 shares b. 74,000 shares c. 75,000 shares d. 84,000 shares pls. answer it asap. thank you
West Ham Company acquired 30 percent of Arsenal Company's common stock, at underlying book value of $110,000 on January 1, 2019. Arsenal has 100,000 shares of $3 par value, 5 percent cumulative preferred stock outstanding. No dividends are in arrears. Arsenal reported net income of $165,000 for 2019 and paid total dividends of $87,000 for both the preferred stock and common stock. West Ham uses the equity method to account for this investment. Based on the preceding information, what amount of investment income will West Ham Company report from its investment in Arsenal for the year?
. Min Hyun Jing Ltd. purchased 21,600 common shares of Glastone Ltd. on January 1, 2018, when the market price was $27.50 per share. This gave Min Hyun Jing 12% of the shares issued by Glastone Ltd. Min Hyun Jing Ltd. has a December 31 year end. For the year ended December 31, 2018, Glastone reported net income of $260,000 and declared dividends of $1.10 per share on December 31. The trading price of Glastone’s shares on that date was $31.20. For the year ended December 31, 2019. Glastone reported net income of $280,000 and declared dividends of $1.15 per share on December 31. The trading price of Glastone’s shares on December 31 was 34.60. Min Hyun Jing Ltd. purchased an additional 20,000 common shares on this date. For the year ended December 31, 2020, Glastone reported a net loss of $80,000, but still declared dividends on December 31, in the amount of $0.75 per share. The trading price of Glastone’s shares on December 31, 2019 was $30.50 per share. For the year ended…
On January 15, 2020 bieber co purchased 30,000 shares of Hand Co. at $35 per share, paying $10,000 in commissions to the broker of the deal. On March 17, 2020, Hand Co. paid a cash dividend of $2.50 per share. The fair value of the Hand Co. stock at the end of 2020 was $38 per share. During 2020, Hand Co. had net income of $3,000,000. Prepare the journal entries for Bieber Co. for the above transaction assuming the amount of shares purchased represents 40% of Hand Co. outstanding stock.
On April 1, 2019, Star Company purchased 30,000 ordinary shares of Moon Company at P180 per share, a price that approximates book value as of that date. At the time of the purchase, Moon had 100,000 ordinary shares outstanding. Star had no ownership interest in Moon before the purchase. The first quarter statement ending March 31, 2019 of Moon recorded earnings of P500,000. For the year remaining 9 months of 2019, Moon reported profit of P2,800,000. White paid Star dividends of P80,000 on June 1 and again P70,000 on December 31, 2019. During 2020, Moon reported profit of P2,000,000 and paid dividends of P2,000,000 to jits shareholders. On January 1, 2021, Star sold 10,000 ordinary shares of Moon for P220 per share. For the year ended December 31, 2021, the reported profit of Moon was P2,500,000 and dividends of P60,000 were paid to Star. The market value of Moon shares remained unchanged during the year 2021. Refer to Star Company. The gain of Star Company on the sale of 10,000…
On July 1, 2021, Fontaine Company purchased for cash 40% of the outstanding common stock of Knoblett Company. Both Fontaine Company and Knoblett Company have a December 31 year-end. Knowblett COmpany, whose common stock is actively traded in the over-the-counter market, reported its total net income for the year to Fontaine Company and also paid cash dividends on November 15, 2021, to Fontaine Company and its other stockholders. Instructions: How should Fontaine Company report the above facts in its December 31, 2021, balance sheet and its income statement for the year then ended? Discuss the rationale for your answer.
During 2021 Blossom Company purchased 8700 shares of Nash Inc. for $17 per share. During the year Blossom Company sold 1850 shares of Nash, Inc. for $22 per share. At December 31, 2021 the market price of Nash, Inc.’s stock was $15 per share. What is the total amount of gain/(loss) that Blossom Company will report in its income statement for the year ended December 31, 2021 related to its investment in Nash, Inc. stock? $-8150 $-17400 $-4450 $9250
On October 1, 2021, Taehyung Company acquired 40,000 ordinary shares for $880,000 at to be held for trading. On November 30, 2021, the investee declared and distributed a 10% ordinary stock dividend when the market price of the share was $250. On December 31, 2021, the entity sold 4,000 shares for $1,000,000. On December 31, 2021, the market value of the shares was $625 per share. For the year ended December 31, 2021, what amount should be reported as gain on sale of investment?