On January 6, 20Y8, Bulldog Co. purchased 28% of the outstanding common stock of Gator Co. for $245,700. Gator Co. paid total dividends of $28,900 to all shareholders on June 30, 20Y8. Gator had a net loss of $56,500 for 20Y8. Required: a. Journalize Bulldog's purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gator Co. stock. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. b. Compute the balance of Investment in Gator Co. Stock on December 31, 20Y8. C. How does valuing an investment under the equity method differ from valuing an investment at fair value?

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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ASSETS
REVENUE
110 Cash
410 Sales
111 Petty Cash
611 Interest Revenue
120 Accounts Receivable
612 Dividend Revenue
121 Allowance for Doubtful Accounts
621 Income of Gator Co.
131 Notes Receivable
631 Gain on Sale of Investments
-132 Interest Receivable
641 Unrealized Gain on Trading Investments
141 Merchandise Inventory
145 Office Supplies
EXPENSES
146 Store Supplies
511 Cost of Merchandise Sold
151 Prepaid Insurance
512 Bad Debt Expense
515 Credit Card Expense
161 Investment in Gator Co. Stock
516 Cash Short and Over
165 Valuation Allowance for Trading Investments
520 Salaries Expense
166 Valuation Allowance for Available-for-Sale Investments
531 Advertising Expense
181 Land
532 Delivery Expense
191 Store Equipment
533 Repairs Expense
192 Accumulated Depreciation-Store Equipment,
534 Selling Expenses
193 Office Equipment
535 Rent Expense
194 Accumulated Depreciation-Office Equipment
536 Insurance Expense
537 Office Supplies Expense
LIABILITIES
L.1.1
Transcribed Image Text:ASSETS REVENUE 110 Cash 410 Sales 111 Petty Cash 611 Interest Revenue 120 Accounts Receivable 612 Dividend Revenue 121 Allowance for Doubtful Accounts 621 Income of Gator Co. 131 Notes Receivable 631 Gain on Sale of Investments -132 Interest Receivable 641 Unrealized Gain on Trading Investments 141 Merchandise Inventory 145 Office Supplies EXPENSES 146 Store Supplies 511 Cost of Merchandise Sold 151 Prepaid Insurance 512 Bad Debt Expense 515 Credit Card Expense 161 Investment in Gator Co. Stock 516 Cash Short and Over 165 Valuation Allowance for Trading Investments 520 Salaries Expense 166 Valuation Allowance for Available-for-Sale Investments 531 Advertising Expense 181 Land 532 Delivery Expense 191 Store Equipment 533 Repairs Expense 192 Accumulated Depreciation-Store Equipment, 534 Selling Expenses 193 Office Equipment 535 Rent Expense 194 Accumulated Depreciation-Office Equipment 536 Insurance Expense 537 Office Supplies Expense LIABILITIES L.1.1
On January 6, 20Y8, Bulldog Co. purchased 28% of the outstanding common stock of Gator Co. for $245,700. Gator Co. paid total dividends of $28,900 to all
NKSHEET.AL...
shareholders on June 30, 20Y8. Gator had a net loss of $56,500 for 20Y8.
SO
Required:
GO
a. Journalize Bulldog's purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gator Co. stock. Refer to the
chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal
GO
page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
b. Compute the balance of Investment in Gator Co. Stock on December 31, 20Y8.
LANKSHEET.AL...
c. How does valuing an investment under the equity method differ from valuing an investment at fair value?
Chart of Accounts
CHART OF ACCOUNTS
Bulldog Co.
General Ledger
REVENUE
ASSETS
410 Sales
110 Cash
611
444
Dntti Cach
Transcribed Image Text:On January 6, 20Y8, Bulldog Co. purchased 28% of the outstanding common stock of Gator Co. for $245,700. Gator Co. paid total dividends of $28,900 to all NKSHEET.AL... shareholders on June 30, 20Y8. Gator had a net loss of $56,500 for 20Y8. SO Required: GO a. Journalize Bulldog's purchase of the stock, receipt of the dividends, and the adjusting entry for the equity loss in Gator Co. stock. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal GO page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. b. Compute the balance of Investment in Gator Co. Stock on December 31, 20Y8. LANKSHEET.AL... c. How does valuing an investment under the equity method differ from valuing an investment at fair value? Chart of Accounts CHART OF ACCOUNTS Bulldog Co. General Ledger REVENUE ASSETS 410 Sales 110 Cash 611 444 Dntti Cach
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