Situation 1Tamarisk Tables acquired 15% of the 5,100,000 shares of common stock of Robot Sofas at a total cost of $8.80 per share on April 1,2020. On August 8, Robot Sofas declared and paid a $263,000 cash dividend. On December 31, Robot Sofas market price was $9 pershare and the company reported net income of $743,000 for the year. The securities are classified as available-for-sale.Situation 2On January 1, 2020, Vaughn Company purchased 40% of Santos Corporation 465,000 outstanding shares of common stock at a totalcost of $13 per share. On October 25, Santos declared and paid a cash dividend of $0.40 per share. On December 31, Santos reporteda net income of $934,000 for the year and the market price of its common stock was $14 per share.Prepare all necessary journal entries in 2020 for both situations. (Credit account titles are automatically indented when 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.)

Answer:- Journal entry:- It refers to the recording of the transaction and event takes place in the…

Answered: Situation 1 Tamarisk Tables acquired…

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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During 2020, Maria Company purchased trading securities with the following cost and market value on December 31, 2020: Security Cost Market Value A - 1,000 shares 200,000 300,000 B - 10,000 shares 1,700,000 1,600,000 C - 20,000 shares 3,100,000 2,900,000 5,000,000 4,800,000 The entity sold 10,000 shares of Security B on January 27, 2021, for P150 per share. What amount should be reported as gain or loss on sale of trading investment in 2021?
On December 31, 2020, Dreamer Company reported as Available-for-sale securities: AT Company, 5,000 shares of common stock (a 1% interest) P 125,000 ITS Company, 10,000 shares of common stock (a 2% interest) 160,000 Two Company, 25,000 shares of common stock (a 10% interest) 700,000 Marketable equity securities, at cost P 985,000 Less: Valuation allowance 50,000 Marketable equity securities, at market P 935,000 Additional information: · On May, 2021, AT Company issued a 10% stock dividend when the market price of its stock was P24 per share. · On November 1, 2021, AT Company paid a cash dividend of P0.75 per share. · On August 5, 2021, ITS Company issued to all shareholders, stock rights on the basis of one right per share. Market prices at date of issue were P13.50 per share (ex-right) of stock and P1.50 per rights. Dreamer Company sold all rights on December 16, 2021 for net proceeds of P18,800. · On July 1, 2021, Dreamer Company paid P1,520,000 for 50,000 additional shares of Two…
The investment accounts maintained by Dexter Company were shown below: Available for Sale Securities - Y Company Ordinary Date Particulars 01-01-2020 Beginning Balance, 3,000 shares 36,000 01-12-2020 2 for 1 share split ( market price after the share split is P7) 12,000 03-17-2020 Sold 1,000 shares at P8 8,000 10-01-2020 Purchased 2,000 additional shares of Y Ordinary at P8 per share plus transaction costs of P0.50 per share 17,000 11-30-2020 Sold 1,000 shares at P8.50 8,500 12-31-2020 Adjustment to fair value (FV is P9.20 per share.) 6,700 Financial Assets at Fair Value through Profit or Loss 0 B Company 06-30-2020 Received a dividend of 1 share of B Company ordinary for every 5 shares of Y Company Ordinary. Market price on this date of B Company Ordinary is P2.50. The shares have par value of P1. 1,000 09-10-2020 Sold 500 shares for P2.80 per share 1,400 12-31-2020 Adjustment to market; fair value is P3.20 per share 2,000 Additional Information: • You traced the…
Hh1.
io 1 TOYOTY Corporation acquired $5,500,000 par value, 12%, five-year bonds on their date of issue, January 1, 2019. The market rate at the time of issue was 8% and interest is paid semiannually on June 30 and December 31. Capitol will use the effective interest rate method to account for this investment. Capitol intends to hold the investment until the bonds mature. Table Present Value of $1 Periods 4% 6% 8% 12% 5 0.8219 0.7473 0.6806 0.5674 10 0.6756 0.5584 0.4632 0.3220 Table Present Value of an Ordinary Annuity Periods 4% 6% 8% 12% 5 4.4518 4.2124 3.9927 3.6048 10 8.1109 7.3601 6.7101 5.6502 Instruction: 1. Determine the purchase price of the investment in bonds. 2. Prepare the journal entry to record the acquisition of the bond investment. 3. Prepare the journal entry to record the interest income at June 30, 2019. 4. Prepare the journal entry to record the sale of the bonds at December 31, 2021 for $5,960,000.
Investments in Stocks--Equity Method or FVTOCI Financial Assets--Equity According to the statements, prepare the appropriate journał entries, and calculate the differences.. Tony Ltd. acquired 30% of the outstanding ordinary shares of Chang Company on January 1, 2018, by paying $900,000 for the 90,000 shares. Chang declared and paid $0.15 per share cash dividends on March 15, June 15, September 15, and December 15, 2018. Chang reported net income of $160,000 for the year. At December 31, 2018, the market price of Chang ordinary shares was $12 per share. Required: 1. Prepare the journal entries for Tony Ltd. for 2018, assuming Tony Ltd. cannot exercise significant influence over Chang, and Tony Ltd. made an irrevocable election to treat the equity investment as fair value through other comprehensive income. 2.: Prepare the journal entries for Tony Ltd. for 2018, assuming Tony Ltd. can exercise significant influence over Chang. Tadicate the statement of financial position and income…
ABC Corporation provided you the following information on January 01, 2021: Share capital, P10 par P4,000,000 Share premium 800,000 Retained earnings 3,500,000 Share transactions for the year 2021: Feb 10 – Declared 10% share dividend. Market value of each share – P20 March 10 – Issued and distributed share dividends declared on February 10 June 15 - Declared 20% share dividend. Market value of each share – P25 July 01 - Issued and distributed share dividends declared on June 15 December 03 – Declared cash dividend of P2 per share Retained earnings for the year 2021 would decrease by: a.3,616,000 b.2,336,000 c.3,616,000 d.1,056,000
Balance Sheet Presentation of Available-for-Sale Investments During Year 1, its first year of operations, Galileo Company purchased two available-for-sale investments as follows: Security Shares Purchased Cost Hawking Inc. 860 $43,602 Pavlov Co. 2,330 61,512 Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $60 per share and the Pavlov Co. stock had a market value of $48 per share. Galileo Company had net income of $337,400 and paid no dividends for the year ending December 31, Year 1. All of the available-for-sale investments are classified as current assets. a. Prepare the Current Assets section of the balance sheet presentation for the available-for-sale investments. Galileo Company Balance Sheet (selected items) December 31, Year 1 Assets Current Assets: $fill in the blank 6f30cb02405dfbc_2 Plus Unrealized Gain (Loss) on Available-for-Sale Investments fill in the blank 6f30cb02405dfbc_4 $fill…
On January 1, 2020, Stellar Industries had stock outstanding as follows. 6% Cumulative preferred stock, $100 par value, issued and outstanding 9,300 shares $930,000 Common stock, $10 par value, issued and outstanding 220,000 shares 2,200,000 To acquire the net assets of three smaller companies, Stellar authorized the issuance of an additional 160,800 common shares. The acquisitions took place as shown below. Date of Acquisition Shares Issued Company A April 1, 2020 48,000 Company B July 1, 2020 82,800 Company C October 1, 2020 30,000 On May 14, 2020, Stellar realized a $93,600 (before taxes) insurance gain on discontinued operations. On December 31, 2020, Stellar recorded income of $282,000 from continuing operations (after tax).Assuming a 20% tax rate, compute the earnings per share data that should appear on the financial statements of Stellar Industries as of December 31, 2020. Stellar IndustriesIncome Statement…
Pecan Company has the following portfolio of investment securities at September 30, 2025, its last reporting date. Trading Securities Perry, Inc. common (12,000 shares) Platter, Inc. common (6,100 shares) Pokey Corp. preferred (1,000 shares) Cost $367,000 244,000 Date 94,000 Fair Value $351,000 248,000 On November 5, 2025, the Platter shares were sold at a price of $42 per share. In addition, 8,000 shares of Patriot common stock were acquired at $37 per share on November 26, 2025. The December 31, 2025, fair values were: Perry $348,000, Pokey $90,000, and the Patriot common $301,000. The Fair Value Adjustment account was at zero (0) as of September 30, 2025. 89,000 Prepare the journal entries to record the sale, purchase, and adjusting entries related to the equity securities in the last quarter of 2025. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for…
Date of issuance: June 17, 2018 Optionally redeemable beginning: June 18, 2020 Par value (gross proceeds): $ 3,000,000 Number of shares: 200,000 Liquidation preference per share: $ 15 Conversion price per share: $ 20.58 Number of common shares in which to be converted: 145,772 Dividend rate: 6.810 % The Preferred Stock is convertible at any time by the holders into a number of shares of Ozark’s common stock equal to the number of preferred shares being converted times a fraction equal to $15 divided by the conversion price. The conversion prices for the Preferred Stock are subject to customary adjustments in the event of stock splits, stock dividends and certain other distributions on the Common Stock. Cumulative dividends for the Preferred Stock are payable in arrears, when, as, and if declared by the Board of Directors, on March 31, June 30, September 30, and December 31 of each year. The Preferred Stock is optionally redeemable by the Company…
Turf Company purchases a 30% interest in Minnie Company for $90,000 on January 1, 2015, whenMinnie has the following stockholders’ equity:Common stock ($10 par). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000Paid-in capital in excess of par . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130,000Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $250,000The excess cost was due to a building that is being amortized over 20 years. Since the investment, Minnie has consistently sold goods to Turf to realize a 40% gross profit. Such sales total $50,000 during 2017. Turf has $10,000 of the goods in its beginning inventory and $40,000 in its ending inventory.On January 1, 2017, Turf sells a machine with a book value of $15,000 to Minnie for $20,000. The machine has a 5-year life and is being depreciated on a…

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