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. Prepare the journal entries for Novak Inc. for 2020 and 2021, assuming that Novak cannot exercise significant influence over Kulikowski. (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 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020June 30, 2021Dec. 31, 2021 Dec. 31, 2020June 30, 2021Dec. 31, 2021 Dec. 31, 2020June 30, 2021Dec. 31, 2021 (To record dividend.) (To record fair value.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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.

Prepare the journal entries for Novak Inc. for 2020 and 2021, assuming that Novak cannot exercise significant influence over Kulikowski. (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 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2020June 30, 2021Dec. 31, 2021

Dec. 31, 2020June 30, 2021Dec. 31, 2021

Dec. 31, 2020June 30, 2021Dec. 31, 2021

	(To record dividend.)


	(To record fair value.)

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