! Required information ED-1 (Algo) Recording and Reporting an Equity Method Security [The following information applies to the questions displayed below.] Felicia Company acquired 20,000 of the 80,000 shares of outstanding common stock of Nueces Corporation as a long- term investment. The annual accounting period for both companies ends December 31. The following transactions occurred during the year: January 10 Purchased 20,000 shares of Nueces common stock at $16 per share. December 31 Nueces Corporation reported net income of $97,000. December 31 Nueces Corporation declared and paid a cash dividend of $0.50 per share. December 31 Determined the fair value of Nueces stock to be $15 per share.
! Required information ED-1 (Algo) Recording and Reporting an Equity Method Security [The following information applies to the questions displayed below.] Felicia Company acquired 20,000 of the 80,000 shares of outstanding common stock of Nueces Corporation as a long- term investment. The annual accounting period for both companies ends December 31. The following transactions occurred during the year: January 10 Purchased 20,000 shares of Nueces common stock at $16 per share. December 31 Nueces Corporation reported net income of $97,000. December 31 Nueces Corporation declared and paid a cash dividend of $0.50 per share. December 31 Determined the fair value of Nueces stock to be $15 per share.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Do not give answer in image formate
![Required information
ED-1 (Algo) Recording and Reporting an Equity Method Security
[The following information applies to the questions displayed below.]
Felicia Company acquired 20,000 of the 80,000 shares of outstanding common stock of Nueces Corporation as a long-
term investment. The annual accounting period for both companies ends December 31. The following transactions
occurred during the year:
January 10
Purchased 20,000 shares of Nueces common stock at $16 per share.
December 31 Nueces Corporation reported net income of $97,000.
December 31 Nueces Corporation declared and paid a cash dividend of $0.50 per share.
December 31 Determined the fair value of Nueces stock to be $15 per share.
ED-1 (Algo) Part 3](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fec20c2bc-5613-42f1-b46c-feb8a3b0649e%2F34e4197f-236e-428a-85f3-554a32118bdd%2F6wntmw9_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
ED-1 (Algo) Recording and Reporting an Equity Method Security
[The following information applies to the questions displayed below.]
Felicia Company acquired 20,000 of the 80,000 shares of outstanding common stock of Nueces Corporation as a long-
term investment. The annual accounting period for both companies ends December 31. The following transactions
occurred during the year:
January 10
Purchased 20,000 shares of Nueces common stock at $16 per share.
December 31 Nueces Corporation reported net income of $97,000.
December 31 Nueces Corporation declared and paid a cash dividend of $0.50 per share.
December 31 Determined the fair value of Nueces stock to be $15 per share.
ED-1 (Algo) Part 3
Transcribed Image Text:ED-1 (Algo) Part 3
3. Show how the long-term investment and the related revenue should be reported on the financial statements of Felicia Company.
Balance Sheet
Long-term Investments:
Investment in Affiliates
Income Statement
Equity in Affiliate Earnings
No
1
2
FELICIA COMPANY
3
4
Date
January 10
December 31
December 31
December 31
> Answer is complete but not entirely correct.
General Journal
Investment in Affiliates
Cash
Investment in Affiliates
Equity in Affiliate Earnings
Cash
Investment in Affiliates
No Journal Entry Required
3
✓
›
Debit
320,000✔
20,200 x
10,000✔
Credit
320,000
20,200 x
10,000
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