Oriole Inc. owns shares of Waterway Corporation stock. At December 31, 2025, the securities were carried in Oriole's accountingrecords at their cost of $997,000, which equals their fair value. On September 21, 2026, when the fair value of the securities was$1,401,000, Oriole declared a property dividend whereby the Waterway securities are to be distributed on October 23, 2026, tostockholders of record on October 8, 2026.Prepare all journal entries necessary on those three dates. (List all debit entries before credit entries. Credit account titles areautomatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the accounttitles and enter O for the amounts. Record entries in the order displayed in the problem statement.)DateAccount Titles and ExplanationSep. 21Sep. 21(To record gain or loss)Oct. 8(To record property dividend)Oct. 23DebitCredit

The objective of the question is to prepare the journal entries for Oriole Inc. for the dates…

Answered: Oriole Inc. owns shares of Waterway…

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 January 1, 2021, Pepita Corporation purchased 25% of the outstanding voting shares of Pablito Supplies common stock for $210,000 cash. On that date, Pablito's book value and fair value were both $840,000. The equity method is deemed appropriate for this investment. Pablito's net income reported on December 31, 2021, was $100,000. During 2021, Pablito also paid cash dividends in the amount of $30,000. Required: Prepare the journal entries necessary to record the above information on Pepita Corporation's books during 2021.
Sagar
On January 3, 2023, Sheppard Corporation purchased 15% of Meredith Corporation's common stock for $62,000. Meredith's net income for the years ended December 31, 2023 and 2024 were $18,000 and $56,000 respectively. Meredith declared no dividends during 2023; however, during 2024, the company declared a $70,000 dividend. On December 31, 2023, the fair value of Meredith's stock that Sheppard Corporation owned had increased to $73,000; in 2024, it increased again to $79,000. What will be the carrying value of the investment at the end of December 31, 2024? Group of answer choices $79,000 $135,000 $73,000 $62,000
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.)
On July 1, 2024, Clearwater Incorporated purchased 7,200 shares of the outstanding common stock of Mountain Corporation at a cost of $152,000. Mountain had 36,000 shares of outstanding common stock. The total book value and total fair value of Mountain's individual net assets on July 1, 2024, are both $760,000. The total fair value of the 36,000 shares of Mountain's common stock on December 31, 2024, is $810,000. Both companies have a January through December fiscal year. The following data pertains to Mountain Corporation during 2024: Dividends declared and paid, January 1-June 30 Dividends declared and paid, July 1-December 31 Net income, January 1-June 30 Net income, July 1-December 31 $ 12,600 $ 12,600 $ 14,600 $ 18,600 Required: 1. Prepare the necessary entries for 2024 under the equity method (other than for the purchase). 2. Prepare any necessary entries for 2024 (other than for the purchase) that would be required if the securities were accounted for under the fair value…
S&L Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2021, S&L purchased Coca-Cola bonds at par for $884,000 and sold the bonds on January 3, 2022, for $ 890,000. At December 31, the bonds had a fair value of $881,000, and S&L has the intent and ability to hold the investment until fair value recovers. Prepare journal entries to record (a) any unrealized gains or losses occurring in 2021 and (b) the sale of the bonds in 2022, including recognition of any unrealized gains in 2022 prior to sale and reclassification of amounts out of OCI.
BuyCo, Incorporated, holds 21 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $11,100 per year. For 2023, Marqueen reported earnings of $111,000 and declares cash dividends of $29,000. During that year, Marqueen acquired inventory for $43,000, which it then sold to BuyCo for $86,000. At the end of 2023, BuyCo continued to hold merchandise with a transfer price of $29,000. What Equity in Investee Income should BuyCo report for 2023? How will the intra-entity transfer affect BuyCo’s reporting in 2024? If BuyCo had sold the inventory to Marqueen, would your answers to parts (a) and (b) change?
Crake Corporation paid $50,000 for a 10% interest in Lagoon Corp. on January 1, 2018, when Lagoon’s stockholders’ equity consisted of $400,000 of $10 par value common stock and $100,000 retained earnings. On December 31, 2019, Crake paid $96,000 for an additional 20% interest in Lagoon Corp. Both of Crake’s investments were made when Lagoon’s book values equaled their fair values. Crake Corporation determines that cumulative dividends for 2019exceed its cumulative share of income by $200, and the 2018 investment in Lagoon Corp fair value increased to $55,000 On December 31, 2019. Lagoon’s net income and dividends for 2018 and 2019 were as follows: 2018 2019 Net income $30,000 $70,000 Dividends $10,000 $20,000 Required: 1. Prepare journal entries for Crake Corporation to account for its investment in Lagoon Corporation for 2018 and 2019. 2.…
Pearl Inc. owns shares of Martinez Corporation stock. At December 31, 2020, the securities were carried in Pearl’s accounting records at their cost of $821,000, which equals their fair value. On September 21, 2021, when the fair value of the securities was $1,333,000, Pearl declared a property dividend whereby the Martinez securities are to be distributed on October 23, 2021, to stockholders of record on October 8, 2021.Prepare all journal entries necessary on those three dates. (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.)
Runner Corporation, which reports under IFRS, has the following investments at December 31, 2024: 2. 3. 4. Trading investments: common shares of National Bank, cost $36,500, fair value $43,400. Investment in an associate (40% ownership): common shares of Sword Corp., cost $218,200, fair value cannot be determined because the shares do not trade publicly. Runner purchased the investment on January 1, 2024. For the year ended December 31, 2024, Sword Corp. reported net income of $46,600 and declared and paid dividends of $15,800. Equity investment: common shares of Epee Inc. (19% ownership) purchased on July 1, 2024, cost $423,300, fair value at December 31, 2024, $545,200. Management intends to purchase more shares of Epee in two years. Epee earned $39,900 for the year ended December 31, 2024, and declared and paid dividends of $1,800, which Runner received at the end of each quarter in 2024. Bond investment to be held to maturity: bonds of Ghoti Ltd., purchased at a cost equal to its…
Indigo Corporation owns shares of Raccoon Company that are classified as part of Indigo's trading portfolio and accounted for using the fair value through net income model. At December 31, 2021, the securities were carried in Indigo's accounting records at their cost of $418,000, which equaled their fair value. On November 1, 2022, when the securities fair value was $442,000, Indigo declared property dividend that will result in Raccoon’s securities being distributed on December 15, 2022 to the shareholders of record on December 1, 2022.Prepare the journal entries for all three dates. Date Account Titles and Explanation Debit Credit Nov. 1, 2022Dec. 1, 2022Dec. 15, 2022 (To record fair value adjustment) (To record declaration of property dividend) Nov. 1, 2022Dec. 1, 2022Dec. 15, 2022 Nov. 1, 2022Dec. 1, 2022Dec. 15, 2022
Gamma Corporation has E&P of $7,000 and 1,000 shares of stock outstanding before the following transaction. Gamma redeems 120 shares of stock in a transaction that qualifies for sale treatment as a redemption. In exchange for the stock, the corporation transfers to the shareholder land with a FMV of $10,200 and a basis to the corporation of $4,000. What is the corporation's ending E&P after this redemption transaction? OA $1,428 OB. Zero OC $3,000 OD.$10,470

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