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Passive Equity Investment b. Assume that Ball's $75,000 investment purchased 30% of Leftwich's voting stock and that Ball accounts for this investment using the equity method since it is able to exert significant influence. For the four transactions described below, record each of the transactions in the financial statement effects template. (1) Ball purchased 5,000 common shares of Leftwich at $15 cash per share; the shares represent a 30% ownership in Leftwich. (2) Leftwich reported annual net income of $40,000. (3) Received a cash dividend of $1.10 per common share from Leftwich. (4) Year-end market price of Leftwich common stock is $19 per share. • Note: Use negative signs with your answers, when appropriate. • Note: Select "N/A" as your answer if a part of the accounting equation is not affected. Trans Equity Method Investment (1) To record purchase of shares. (2) To record share of income. (3) To record dividends. (4) To record adjusting entry. Cash Asset 0 ◆ 0 ◆ 0 0 ◆ Balance Sheet Noncash Assets 0 ◆ 0 ◆ 0 0 ◆ Lia 0 ◆ Contributec Capital

Passive Equity Investment b. Assume that Ball's $75,000 investment purchased 30% of Leftwich's voting stock and that Ball accounts for this investment using the equity method since it is able to exert significant influence. For the four transactions described below, record each of the transactions in the financial statement effects template. (1) Ball purchased 5,000 common shares of Leftwich at $15 cash per share; the shares represent a 30% ownership in Leftwich. (2) Leftwich reported annual net income of $40,000. (3) Received a cash dividend of $1.10 per common share from Leftwich. (4) Year-end market price of Leftwich common stock is $19 per share. • Note: Use negative signs with your answers, when appropriate. • Note: Select "N/A" as your answer if a part of the accounting equation is not affected. Trans Equity Method Investment (1) To record purchase of shares. (2) To record share of income. (3) To record dividends. (4) To record adjusting entry. Cash Asset 0 ◆ 0 ◆ 0 0 ◆ Balance Sheet Noncash Assets 0 ◆ 0 ◆ 0 0 ◆ Lia 0 ◆ Contributec Capital

FINANCIAL ACCOUNTING
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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Passive Equity Investment b. Assume that Ball's $75,000 investment purchased 30% of Leftwich's voting stock and that Ball accounts for this investment using the equity method since it is able to exert significant influence. For the four transactions described below, record each of the transactions in the financial statement effects template. (1) Ball purchased 5,000 common shares of Leftwich at $15 cash per share; the shares represent a 30% ownership in Leftwich. (2) Leftwich reported annual net income of $40,000. (3) Received a cash dividend of $1.10 per common share from Leftwich. (4) Year-end market price of Leftwich common stock is $19 per share. Equity Method Investment • Note: Use negative signs with your answers, when appropriate. • Note: Select "N/A" as your answer if a part of the accounting equation is not affected. Transaction (1) To record purchase of shares. (2) To record share of income. (3) To record dividends. (4) To record adjusting entry. Cash Asset 0 ◆ 0 ◆ 0 ◆ 0 ◆ + Balance Sheet Noncash Assets 0 ◆ 0 ◆ 0 ◆ 0 ♦ Liabilities 0 ◆ Contributed Capital
Transcribed Image Text:Passive Equity Investment b. Assume that Ball's $75,000 investment purchased 30% of Leftwich's voting stock and that Ball accounts for this investment using the equity method since it is able to exert significant influence. For the four transactions described below, record each of the transactions in the financial statement effects template. (1) Ball purchased 5,000 common shares of Leftwich at $15 cash per share; the shares represent a 30% ownership in Leftwich. (2) Leftwich reported annual net income of $40,000. (3) Received a cash dividend of $1.10 per common share from Leftwich. (4) Year-end market price of Leftwich common stock is $19 per share. Equity Method Investment • Note: Use negative signs with your answers, when appropriate. • Note: Select "N/A" as your answer if a part of the accounting equation is not affected. Transaction (1) To record purchase of shares. (2) To record share of income. (3) To record dividends. (4) To record adjusting entry. Cash Asset 0 ◆ 0 ◆ 0 ◆ 0 ◆ + Balance Sheet Noncash Assets 0 ◆ 0 ◆ 0 ◆ 0 ♦ Liabilities 0 ◆ Contributed Capital
On January 1, Ball Corporation purchased, as a stock investment, 5,000 shares of Leftwich Company common stock for $15 cash per share. On December 31, Leftwich announced net income of $40,000 for the year and paid a cash dividend of $1.10 per share. At December 31, the market value of Leftwich's stock was $19 per share. Passive Equity Investment Equity Method Investment a. Assume that the stock acquired by Ball represents 15% of Leftwich's voting stock-a passive equity investment. Record each of the following transactions in the financial statement effects template. (1) Ball purchased 5,000 common shares of Leftwich at $15 cash per share; the shares represent a 15% ownership in Leftwich. (2) Leftwich reported annual net income of $40,000. (3) Received a cash dividend of $1.10 per common share from Leftwich. (4) Year-end market price of Leftwich common stock is $19 per share. • Note: Use negative signs with your answers, when appropriate. • Note: Select "N/A" as your answer if a part of the accounting equation is not affected. Transaction (1) To record purchase of shares. (2) To record share of income. (3) To record dividends. (4) To record adjusting entry. Cash Asset 0 0 ◆ 0 0 ♦ Balance Sheet Noncash Assets 0 ◆ 0 ◆ 0 → 0 ◆ Liabilities 0 ◆ Contributed Capital
Transcribed Image Text:On January 1, Ball Corporation purchased, as a stock investment, 5,000 shares of Leftwich Company common stock for $15 cash per share. On December 31, Leftwich announced net income of $40,000 for the year and paid a cash dividend of $1.10 per share. At December 31, the market value of Leftwich's stock was $19 per share. Passive Equity Investment Equity Method Investment a. Assume that the stock acquired by Ball represents 15% of Leftwich's voting stock-a passive equity investment. Record each of the following transactions in the financial statement effects template. (1) Ball purchased 5,000 common shares of Leftwich at $15 cash per share; the shares represent a 15% ownership in Leftwich. (2) Leftwich reported annual net income of $40,000. (3) Received a cash dividend of $1.10 per common share from Leftwich. (4) Year-end market price of Leftwich common stock is $19 per share. • Note: Use negative signs with your answers, when appropriate. • Note: Select "N/A" as your answer if a part of the accounting equation is not affected. Transaction (1) To record purchase of shares. (2) To record share of income. (3) To record dividends. (4) To record adjusting entry. Cash Asset 0 0 ◆ 0 0 ♦ Balance Sheet Noncash Assets 0 ◆ 0 ◆ 0 → 0 ◆ Liabilities 0 ◆ Contributed Capital
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