On Jamuary 1, 2011, Papa Doc Donuts, purchased 30,000 shares of Frenchie's Beignets for $5 per share. This purchasegives Papa Doc Donuts a 7.5% stake in Frenchie's Beignets. On January 1, 2013, Papa Doc Donuts purchased anadditional 90,000 shares for $6 per share gaining an additional 22.5% stake in Frenchie's Beignets. This latest purchasegave Papa Doc Donuts the ability to apply significant influence over Frenchie's Beignets. The original 7.5% investmentwas categorized and accounted for as an available for sale security.Frenchie's Beignets reports net income cash đividends and per share prices as follows. These amounts are assumed tohave occurred evenly throughout these years. Cash dividends are declared and paid in the same period.Per Share PriceCash Dividends$180,000(December 31st Spot Rate)$6.50YearNet Income2011S600,000$190,000$145,000$145,000$165,000$5.50$7.00$7.50$9.002012$520,000$480,000$515,000$605,000201320142015On March 31, 2015, Papa Doc sells 12,000 shares of Frenchie's Beignets capital stock for $8.50 per share.4.) Prepare the necessary journal entry(s) Papa Doc Donuts would need to account for the January 1, 2013 acquisition of22.5% of Frenchie's Beignets capital stock. {Hint-Something changes at this point, you should have more than onejoumal entry}

On January 1, 2011, Papa Doc Donuts, purchased 30,000 shares of Frenchie's Beignets gives Papa Doc Donuts a 7.5% stake in Frenchie's Beignets. On January 1, 2013, Papa D additional 90,000 shares for $6 per share gaining an additional 22.5% stake in Frenchies gave Papa Doc Donuts the ability to apply significant influence over Frenchie's Beignets 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. T have occurred evenly throughout these years. Cash dividends are declared and paid in th

On January 1, 2011, Papa Doc Donuts, purchased 30,000 shares of Frenchie's Beignets gives Papa Doc Donuts a 7.5% stake in Frenchie's Beignets. On January 1, 2013, Papa D additional 90,000 shares for $6 per share gaining an additional 22.5% stake in Frenchies gave Papa Doc Donuts the ability to apply significant influence over Frenchie's Beignets 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. T have occurred evenly throughout these years. Cash dividends are declared and paid in th

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

AB Inc. acquired 100% stake in CD Inc. on January 1, 2013 by issuing 20,000 shares of common stock. The shares have a fair value of $15 per share. AB also paid $30,000 in stock issuance costs. Just before acquisition, AB had Common stock of $360,000 and Additional paid-in capital of 20,000. CD had Common stock of $80,000 and Additional paid- in capital of $40,000 and Retained earnin of Assuming both companies continue to operate separately, consolidation entry (S) would include: Select one: O a. A credit to Common Stock with $80,000 O b. A credit to Investment account with $200,000 O c. A debit to Additional paid-in capital with $20,000 O d. A credit to retained earnings with $80,000
On January 1, Tasty Foods purchased 10,000 shares (100%) of Eco-Safe Packaging’s voting stock for $12 per share. Throughout the year, both companies continue to operate as separate legal entities. By December 31, Eco-Safe Packaging’s cash balance is $2,000, and Tasty Foods’ cash balance is $5,000. In preparing its year-end financial statements, for how much would Tasty Foods report its cash balance? a. $7,000.b. $5,000.c. $3,000.d. $2,000.
CFR, Inc. purchased a 10% interest in The Candy Company on January 2, 2013. The purchase price was $400,000. CFR's officers constitute a majority of The Candy Company's board of directors. The investee reported net income of $500,000 and paid dividends of $150,000 in 2013. On the December 31, 2013, balance sheet, what amount should CFR report as Equity Investment in The Candy Company? a. $900,000 b. $870,000 c. $800,000 d. $830,000 The answer is B, but I don't understand why
See Image
On January 1, 2013, Ruark Corporation acquired a 40 percent interest in Batson, Inc., for $210,000. On that date, Batson's balance sheet disclosed net assets with both a fair and book value of $360,000. During 2013, Batson reported net income of $80,000 and paid cash dividends of $25,000. Ruark sold inventory costing $30,000 to Batson during 2013 for $40,000. Batson used all of this merchandise in its operations during 2013. Prepare all of Ruark's 2013 journal entries to apply the equity method to this investment. General Journal Debit To record acquisition. Investment in Batson, Inc. Cash To recognize income earned. Investment in Batson, Inc. Equity in Investee Income To record collection of dividend. Cash Investment in Batson, Inc. Credit
See Image
The following are two independent situations.Situation 1Cheyenne Cosmetics acquired 10% of the 191,000 shares of common stock of Martinez Fashion at a total cost of $14 per share on March 18, 2020. On June 30, Martinez declared and paid $80,900 cash dividend to all stockholders. On December 31, Martinez reported net income of $121,000 for the year. At December 31, the market price of Martinez Fashion was $15 per share.Situation 2Ayayai, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 29,700 outstanding shares of common stock at a total cost of $10 per share on January 1, 2020. On June 15, Seles declared and paid cash dividends of $33,000 to all stockholders. On December 31, Seles reported a net income of $79,200 for the year.Prepare all necessary journal entries in 2020 for both situations.
See Image
See Image
Subject: acounting
A few years ago, Posey Ltd. acquired 90 percent of the common shares of Suba Co. In February 2000, Suba purchased goods for $12,000 and in April 20X0, sold them to Posey for $15,000. Suba's usual gross margin is 25 percent, but it gave Posey a discount, In July 20X0, Posey sold 60 percent of those goods to one of its customers for $12,000. The rest of the goods remain unsold at the end of the year. Both Posey and Suba have income tax rates of 40 percent. To calculate the income tax expense for the consolidated income statement, add together the income tax expense from Posey and Suba's separate-entity income statements and reduce by a net adjustment of a. $0. Ob. $384. Oc. $480. d. $600.
The following are two independent situations.Situation 1Novak Cosmetics acquired 10% of the 215,000 shares of common stock of Martinez Fashion at a total cost of $12 per share on March 18, 2020. On June 30, Martinez declared and paid $74,400 cash dividend to all stockholders. On December 31, Martinez reported net income of $133,600 for the year. At December 31, the market price of Martinez Fashion was $13 per share.Situation 2Splish, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 28,500 outstanding shares of common stock at a total cost of $9 per share on January 1, 2020. On June 15, Seles declared and paid cash dividends of $35,400 to all stockholders. On December 31, Seles reported a net income of $91,800 for the year.Prepare all necessary journal entries in 2020 for both situations. (