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Selk Steel Company, which began operations in Year 1, had the following transactions and events in its long-term investments.

Selk Steel Company, which began operations in Year 1, had the following transactions and events in its long-term investments.

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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Required information [The following information applies to the questions displayed below.] Selk Steel Company, which began operations in Year 1, had the following transactions and events in its long-term investments. Year 1 January 5 Selk purchased 50,000 shares (20% of total) of Kildaire's common stock for $1,600,000. October 23 Kildaire declared and paid a cash dividend of $2.10 per share. December 31 Kildaire's net income for the year is $1,133,000, and the fair value of its stock at December 31 is $39 per share. Year 2 October 15 Kildaire declared and paid a cash dividend of $3.10 per share. December 31 Kildaire's net income for the year is $1,138,000, and the fair value of its stock at December 31 is $42 per share. Year 3 January 2 Selk sold 3% (equal to 1,500 shares) of its investment in Kildaire for $56,300 cash. Assume that although Selk owns 20% of Kildaire's outstanding stock, circumstances indicate that it does not have a significant influence over the investee. Required: Prepare journal entries to record the preceding transactions and events for Selk.
Transcribed Image Text:Required information [The following information applies to the questions displayed below.] Selk Steel Company, which began operations in Year 1, had the following transactions and events in its long-term investments. Year 1 January 5 Selk purchased 50,000 shares (20% of total) of Kildaire's common stock for $1,600,000. October 23 Kildaire declared and paid a cash dividend of $2.10 per share. December 31 Kildaire's net income for the year is $1,133,000, and the fair value of its stock at December 31 is $39 per share. Year 2 October 15 Kildaire declared and paid a cash dividend of $3.10 per share. December 31 Kildaire's net income for the year is $1,138,000, and the fair value of its stock at December 31 is $42 per share. Year 3 January 2 Selk sold 3% (equal to 1,500 shares) of its investment in Kildaire for $56,300 cash. Assume that although Selk owns 20% of Kildaire's outstanding stock, circumstances indicate that it does not have a significant influence over the investee. Required: Prepare journal entries to record the preceding transactions and events for Selk.
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