On January 1, Poitras Ltée, a public company, purchases 20% of Blue Corporation's common shares for $256,000 for strategicpurposes. For the year ended December 31, Blue reports profit of $217,000 and pays a $14,000 cash dividend. The fair value ofPoitras's investment in Blue at December 31 is $279,000.Prepare journal entries required assuming Poitras has significant influence over Blue. (Record entries in the order displayed in theproblem statement. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Ifno entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before creditentries.)DateAccount Titles and Explanation(To record investment income.)(To record collection of dividend.)DebitCredit

Answered: On January 1, Poitras Ltée, a public…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On February 1. Mini Company purchased 1.000 shares (2% ownership) of Win Company common stock for $30 per share. The shares are classified as a short-term investment. On March 20, Mini Company sold 200 shares of Win stock for $5,800. Mini received a dividend of $1 per share on April 25. The fair value of the remaining stock is $26,400 on June 30. The entry to record the appropriate fair value adjustment on June 30 would include a debit to O Urealzed Gain or Lass - Income in the amount of $2,400. 57 167 points O Fair Value Adjustment -Stock in the amount of $2.400. O Unrealized Gain or Loss -Income in the amount of $3,600. O No gain or loss should be recorded because no adlitional shares were sold on June 30. 58 L66 points The Norfolk Pine Co purchased 10.000 shares of Peperomia Ginny, Inc. on July 1 at a cost of $18 per share. On December 1, Norfolk Pine sells 600 shares at a price of $20 per share. Norfolk Pine's entry to record this transaction will include a 0 debit to Common Stock…
Cayuga Meadows purchased 42,000 shares of common stock of Long Corporation as a long-term investment for $1,000,000. During the year, Long Corporation reported net income of $500,000 Paid dividends of $200,000. Instructions: Assuming this purchase represents a 25% interest, prepare all the journal entries required for the year.
Indigo Corporation purchased 370 shares of Sherman Inc. common stock for $13,100 (Indigo does not have significant influence). During the year, Sherman paid a cash dividend of $3.00 per share. At year-end, Sherman stock was selling for $37.50 per share. Assume the stock is nonmarketable. Prepare Indigo's journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (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.)
Lauralee, Inc. owns a 30% interest in Eastwood Co., giving it representation on the investee’s board of directors. At the beginning of the year, the Equity Investment was carried on Lauralee’s balance sheet at $500,000. During the year, Eastwood reported net income of $250,000 and paid Lauralee a dividend of $50,000. In addition, Lauralee sold inventory to Eastwood, recording a gross profit of $20,000 on the sale. At the end of the year, 50% of the merchandise remained unsold by Eastwood. Required: a. Prepare the equity method journal entry to defer the unrealized inventory gross profit.b. How much equity income should Lauralee report from Eastwood during the year?c. What is the balance in the Equity Investment at the end of the year?
Canada Goose, a Canadian publicly traded company, purchased 20% of Feather Ltd's common shares for $450,000 cash on January 3, 2022. During the year, Feather reported net income of $700,000 and declared and paid dividends of $80,000. The investment's fair value on December 31, 2022, was $550,000, the company's year-end. On January 1, 2022, Canada Goose had a cash and retained earnings balance of $2,000,000. Required: Assuming Canada Goose has significant influence over Feather Ltd, prepare, in good format, the relevant parts of Canada Goose's Statement of Financial Position.
As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Incorporated's 430,000 shares for $510,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC's net assets were equal. During the year, AMC earned net income of $280,000 and distributed cash dividends of 15 cents per share. At year-end, the fair value of the shares is $538,000. Required: 1. Assume no significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet 1 2 3 4 Record the purchase of AMC Supplies shares for $510,000 as a long-term investment. Note: Enter debits before credits. Transactions General Journal Debit Credit
Rowan Co. purchases 100 common shares (40%) of JBI Corp. as a long-term investment for $500,000 cash on July 1. JBI paid $5,000 in total cash dividends on November 1 and reported net income of $100,000 for the year. Prepare Rowan’s entries to record (1) the purchase of JBI shares, (2) the receipt of its share of JBI dividends, and (3) the December 31 year-end adjustment for its share of JBI net income.
Spartan Corporation redeemed 25 percent of its shares for $1,800 on July 1 of this year, in a transaction that qualified as an exchange under IRC §302(a). Spartan’s accumulated E&P at the beginning of the year was $1,800. Its current E&P is $16,300. Spartan made dividend distributions of $2,700 on June 1 and $6,000 on August 31. Determine the beginning balance in Spartan’s accumulated E&P at the beginning of the next year. See Revenue Rules 74-338 and 74-339 for help in making this calculation. (Round your intermediate calculations to the nearest whole dollar amount.)
Concord Corporation purchased for $285,000 a 25% interest in Murphy, Inc. This investment enables Concord to exert significant influence over Murphy. During the year, Murphy earned net income of $185,000 and paid dividends of $54,000.Prepare Concord’s journal entries related to this investment. (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.) Account Titles and Explanation Debit Credit enter an account title to record the purchase enter a debit amount enter a credit amount enter an account title to record the purchase enter a debit amount enter a credit amount (To record the purchase.) enter an account title to record the net income enter a debit amount enter a credit amount enter an account title to record the net income enter a debit amount enter a credit amount (To record the net income.)…
Marigold Corporation purchased 630 common shares of Ditch Inc. for $12,900 on February 21. Marigold paid a 1% commission on the share purchase and, because the shares were not publicly traded, decided to account for them following the cost model. On June 30, Ditch declared and paid a cash dividend of $1.90 per share. (a) Prepare Marigold Corporation's journal entry to record the purchase of the 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. List debit entry before credit entry.) Date Account Titles and Explanation Feb. 21 Debit Credit
Conroy Financial paid $530,000 for a 20% investment in the common stock ofMaverick, Inc. For the first year, Maverick reported net income of $270,000, and at year-enddeclared and paid cash dividends of $115,000. On the balance-sheet date, the fair value of Conroy’s investment in Maverick stock was $410,000.Requirements1. Which method is appropriate for Conroy to use in its accounting for its investment inMaverick? Why?2. Show everything that Conroy would report for the investment and any investment revenuein its year-end financial statements.
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.

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