On January 1, 2011, Papa Doc Donuts, purchased 30,000 shares of Frenchie's Beignets for $5 per share. This purchase gives Papa Doc Donuts a 7.5% stake in Frenchie's Beignets. On January 1, 2013, Papa Doc Donuts purchased an additional 90,000 shares for $6 per share gaining an additional 22.5% stake in Frenchie's Beignets. This latest purchase gave Papa Doc Donuts the ability to apply significant influence over Frenchie's Beignets. The original 7.5% investment was categorized and accounted for as an available for sale security. Frenchie's Beignets reports net income cash dividends and per share prices as follows. These amounts are assumed to have occurred evenly throughout these years. Cash dividends are declared and paid in the same period. Per Share Price Net Income $600,000 (December 31st Spot Rate) $6.50 Year Cash Dividends 2011 $180,000 2012 $5.50 $520,000 $480,000 $515,000 S605,000 $190,000 $145,000 $145,000 $165,000 2013 $7.00 2014 $7.50 2015 $9.00 On March 31, 2015, Papa Doc sells 12,000 shares of Frenchie's Beignets capital stock for $8.50 per share. Complete The Following: 1.) Prepare the necessary journal entry Papa Doc Donuts would need to account for the January 1, 2011 acquisition of 7.5% of Frenchie's Beignets capital stock.
On January 1, 2011, Papa Doc Donuts, purchased 30,000 shares of Frenchie's Beignets for $5 per share. This purchase gives Papa Doc Donuts a 7.5% stake in Frenchie's Beignets. On January 1, 2013, Papa Doc Donuts purchased an additional 90,000 shares for $6 per share gaining an additional 22.5% stake in Frenchie's Beignets. This latest purchase gave Papa Doc Donuts the ability to apply significant influence over Frenchie's Beignets. The original 7.5% investment was categorized and accounted for as an available for sale security. Frenchie's Beignets reports net income cash dividends and per share prices as follows. These amounts are assumed to have occurred evenly throughout these years. Cash dividends are declared and paid in the same period. Per Share Price Net Income $600,000 (December 31st Spot Rate) $6.50 Year Cash Dividends 2011 $180,000 2012 $5.50 $520,000 $480,000 $515,000 S605,000 $190,000 $145,000 $145,000 $165,000 2013 $7.00 2014 $7.50 2015 $9.00 On March 31, 2015, Papa Doc sells 12,000 shares of Frenchie's Beignets capital stock for $8.50 per share. Complete The Following: 1.) Prepare the necessary journal entry Papa Doc Donuts would need to account for the January 1, 2011 acquisition of 7.5% of Frenchie's Beignets capital stock.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2011, Papa Doc Domuts, purchased 30,000 shares of Frenchie's Beignets for $5 per share. This purchase
gives Papa Doc Donuts a 7.5% stake in Frenchie's Beignets. On January 1, 2013, Papa Doc Donuts purchased an
additional 90,000 shares for $6 per share gaining an additional 22.5% stake in Frenchie's Beignets. This latest purchase
gave Papa Doc Donuts the ability to apply significant influence over Frenchie's Beignets. The original 7.5% investment
was categorized and accounted for as an available for sale security.
Frenchie's Beignets reports net income cash dividends and per share prices as follows. These amounts are assumed to
have occurred evenly throughout these years. Cash dividends are declared and paid in the same period.
Per Share Price
Net Income
S600,000
$520,000
$480,000
$515,000
S605,000
Year
2011
(December 31st Spot Rate)
$6.50
Cash Dividends
$180,000
$190,000
$145,000
$145,000
$165,000
$5.50
$7.00
$7.50
$9.00
2012
2013
2014
2015
On March 31, 2015, Papa Doc sells 12,000 shares of Frenchie's Beignets capital stock for $8.50 per share.
Complete The Following:
1.) Prepare the necessary journal entry Papa Doc Domuts would need to account for the January 1, 2011 acquisition of
7.5% of Frenchie's Beignets capital stock.
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