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Presented below is information related to the purchases of common stock by Carla Company during 2020. Cost Fair Value (at purchase date) (at December 31) Investment in Arroyo Company stock $107,000 $88,000 Investment in Lee Corporation stock 230,000 278,000 Investment in Woods Inc. stock 190,000 200,000 Total $527,000 $566,000

Presented below is information related to the purchases of common stock by Carla Company during 2020. Cost Fair Value (at purchase date) (at December 31) Investment in Arroyo Company stock $107,000 $88,000 Investment in Lee Corporation stock 230,000 278,000 Investment in Woods Inc. stock 190,000 200,000 Total $527,000 $566,000

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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**Purchases of Common Stock by Carla Company in 2020** The table below provides information about Carla Company's purchases of common stock during 2020, detailing the cost at the purchase date and the fair value at December 31. | Investment | Cost (at purchase date) | Fair Value (at December 31) | |------------------------------------|--------------------------|-----------------------------| | Investment in Arroyo Company stock | $107,000 | $88,000 | | Investment in Lee Corporation stock| $230,000 | $278,000 | | Investment in Woods Inc. stock | $190,000 | $200,000 | | **Total** | **$527,000** | **$566,000** | *(Assume a zero balance for any Fair Value Adjustment account.)* **Questions:** (a) What entry would Carla make at December 31, 2020, to record the investment in Arroyo Company stock if it chooses to report this security using the fair value option? (b) What entry would Carla make at December 31, 2020, to record the investments in the Lee and Woods corporations, assuming that Carla did not select the fair value option for these investments?
Transcribed Image Text:**Purchases of Common Stock by Carla Company in 2020** The table below provides information about Carla Company's purchases of common stock during 2020, detailing the cost at the purchase date and the fair value at December 31. | Investment | Cost (at purchase date) | Fair Value (at December 31) | |------------------------------------|--------------------------|-----------------------------| | Investment in Arroyo Company stock | $107,000 | $88,000 | | Investment in Lee Corporation stock| $230,000 | $278,000 | | Investment in Woods Inc. stock | $190,000 | $200,000 | | **Total** | **$527,000** | **$566,000** | *(Assume a zero balance for any Fair Value Adjustment account.)* **Questions:** (a) What entry would Carla make at December 31, 2020, to record the investment in Arroyo Company stock if it chooses to report this security using the fair value option? (b) What entry would Carla make at December 31, 2020, to record the investments in the Lee and Woods corporations, assuming that Carla did not select the fair value option for these investments?
**Instructions for Journal Entry:** *Credit account titles are automatically indented when an 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.* **Table Structure:** - **Columns:** - **No.:** A placeholder for the entry number (a, b, etc.) - **Account Titles and Explanation:** Space for detailing account names and descriptions. - **Debit:** Space to enter debit amounts. - **Credit:** Space to enter credit amounts. **Rows:** - **(a):** - Three blank fields: One for account titles and explanations, one for debit amounts, and one for credit amounts. - **(b):** - Three blank fields: One for account titles and explanations, one for debit amounts, and one for credit amounts. This template is used for recording financial transactions in an organized manner, with clear distinctions between debits and credits.
Transcribed Image Text:**Instructions for Journal Entry:** *Credit account titles are automatically indented when an 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.* **Table Structure:** - **Columns:** - **No.:** A placeholder for the entry number (a, b, etc.) - **Account Titles and Explanation:** Space for detailing account names and descriptions. - **Debit:** Space to enter debit amounts. - **Credit:** Space to enter credit amounts. **Rows:** - **(a):** - Three blank fields: One for account titles and explanations, one for debit amounts, and one for credit amounts. - **(b):** - Three blank fields: One for account titles and explanations, one for debit amounts, and one for credit amounts. This template is used for recording financial transactions in an organized manner, with clear distinctions between debits and credits.
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