On September 12, 3,000 shares of Denver Company’s common stock are acquired at a price of $40 per share plus a $300 brokerage commission. On October 15, an $0.80-per-share dividend was received on the Denver Company stock. On November 10, 1,600 shares of the Denver Company stock were sold for $36 per share less a $150 brokerage commission. At the end of the accounting period on December 31, the fair value of the remaining 1,400 shares of Denver Company’s stock was $35 per share. Denver Company has 400,000 shares of common stock outstanding. Journalize the entries for the original purchase, dividend, sale, and change in fair value under the fair value method. If an amount box does not require an entry, leave it blank. Sep. 12 Investments-Denver Company Stock Investments-Denver Company Stock Cash Cash Oct. 15 Cash Cash Dividend Revenue Dividend Revenue Nov. 10 Cash Cash Loss on Sale of Investments Loss on Sale of Investments Investments-Denver Company Stock Investments-Denver Company Stock Dec. 31 Unrealized Loss on Equity Investments Unrealized Loss on Equity Investments Valuation Allowance for Equity Investments Valuation Allowance for Equity Investments
On September 12, 3,000 shares of Denver Company’s common stock are acquired at a price of $40 per share plus a $300 brokerage commission. On October 15, an $0.80-per-share dividend was received on the Denver Company stock. On November 10, 1,600 shares of the Denver Company stock were sold for $36 per share less a $150 brokerage commission. At the end of the accounting period on December 31, the fair value of the remaining 1,400 shares of Denver Company’s stock was $35 per share. Denver Company has 400,000 shares of common stock outstanding. Journalize the entries for the original purchase, dividend, sale, and change in fair value under the fair value method. If an amount box does not require an entry, leave it blank. Sep. 12 Investments-Denver Company Stock Investments-Denver Company Stock Cash Cash Oct. 15 Cash Cash Dividend Revenue Dividend Revenue Nov. 10 Cash Cash Loss on Sale of Investments Loss on Sale of Investments Investments-Denver Company Stock Investments-Denver Company Stock Dec. 31 Unrealized Loss on Equity Investments Unrealized Loss on Equity Investments Valuation Allowance for Equity Investments Valuation Allowance for Equity Investments
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Equity investments: Less than 20% ownership
On September 12, 3,000 shares of Denver Company’s common stock are acquired at a price of $40 per share plus a $300 brokerage commission. On October 15, an $0.80-per-share dividend was received on the Denver Company stock. On November 10, 1,600 shares of the Denver Company stock were sold for $36 per share less a $150 brokerage commission. At the end of the accounting period on December 31, the fair value of the remaining 1,400 shares of Denver Company’s stock was $35 per share. Denver Company has 400,000 shares of common stock outstanding.
| Sep. 12 |
|
Investments-Denver Company Stock | Investments-Denver Company Stock |
|
|
Cash | Cash | |
| Oct. 15 |
|
Cash | Cash |
|
|
Dividend Revenue | Dividend Revenue | |
| Nov. 10 |
|
Cash | Cash |
|
|
Loss on Sale of Investments | Loss on Sale of Investments | |
|
|
Investments-Denver Company Stock | Investments-Denver Company Stock | |
| Dec. 31 |
|
Unrealized Loss on Equity Investments | Unrealized Loss on Equity Investments |
|
|
Valuation Allowance for Equity Investments | Valuation Allowance for Equity Investments |
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