Required information [The following information applies to the questions displayed below.] As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Incorporated's 430,000 shares for $510,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC's net assets were equal. During the year, AMC earned net income of $280,000 and distributed cash dividends of 15 cents per share. At year-end, the fair value of the shares is $538,000. 2. Assume significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Required information [The following information applies to the questions displayed below.] As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Incorporated's 430,000 shares for $510,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC's net assets were equal. During the year, AMC earned net income of $280,000 and distributed cash dividends of 15 cents per share. At year-end, the fair value of the shares is $538,000. 2. Assume significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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me.2
![Required information
[The following information applies to the questions displayed below.]
As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Incorporated's 430,000 shares
for $510,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of
AMC's net assets were equal. During the year, AMC earned net income of $280,000 and distributed cash dividends of 15
cents per share. At year-end, the fair value of the shares is $538,000.
2. Assume significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
No
1
Transactions
1
General Journal
Investment in equity securities
Cash
Debit
510,000
Credit
510,000
2
2
Investment in equity securities
56,000
Gain on investments (unrealized, NI)
56,000
3
3
Cash
Investment in equity securities
4
4
12,900
12,900](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fadee869f-50c1-4d3e-bcf9-623c73ef1ad5%2F8d3b71e0-f521-4a72-8307-7a7857a50575%2Fmjtzckh_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Incorporated's 430,000 shares
for $510,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of
AMC's net assets were equal. During the year, AMC earned net income of $280,000 and distributed cash dividends of 15
cents per share. At year-end, the fair value of the shares is $538,000.
2. Assume significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
No
1
Transactions
1
General Journal
Investment in equity securities
Cash
Debit
510,000
Credit
510,000
2
2
Investment in equity securities
56,000
Gain on investments (unrealized, NI)
56,000
3
3
Cash
Investment in equity securities
4
4
12,900
12,900
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