Horngren's Financial & Managerial Accounting (5th Edition)
Horngren's Financial & Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780133866292
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Chapter 10, Problem 10.22BP

Accounting for stock investments

The beginning balance sheet of Water Source Co. included a $800,000 investment in Larsen stock (35% ownership).

During the year, Water Source completed the following investment transactions:

Mar. 3 Purchased 6,000 shares at $7 per share of Jack Software common stock as a long-term, available-for-sale investment, representing 3% ownership.
May 15 Received a cash dividend of $0.53 per share on the Jack investment.
Dec. 15 Received a cash dividend of $1 10,000 from Larsen investment.
31 Received Larsen's annual report showing $110,000 of net income.
31 Received Jack's annual report showing $600,000 of net income for the year.
31 Larsen's stock fair value at year-end was $728,500.
31 Jack's common stock fair value at year-end was $10 per share.

Requirements

1. Journalize the transactions for the year of Water Source.

2. Post transactions to T-accounts to determine the December 31, 2016, balances related to the investment and investment income accounts.

3. Prepare Water Source's partial balance sheet at December 31, 2016, from your answers in Requirement 2.

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Chapter 10 Solutions

Horngren's Financial & Managerial Accounting (5th Edition)

Ch. 10 - What is a debt security?Ch. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Briefly describe the five specific types of debt...Ch. 10 - How is the purchase of a held-to-maturity debt...Ch. 10 - Prob. 6RQCh. 10 - What method is used for investments in equity...Ch. 10 - What method is used for investments in equity...Ch. 10 - What adjustment must be made at the end of the...Ch. 10 - Where on the financial statements is an unrealized...Ch. 10 - Prob. 11RQCh. 10 - Prob. 12RQCh. 10 - Prob. 13RQCh. 10 - What does the rate of return on total assets...Ch. 10 - Identifying why companies invest and classifying...Ch. 10 - Prob. 10.2SECh. 10 - Prob. 10.3SECh. 10 - Accounting for equity method On January 1, 2016,...Ch. 10 - Accounting for trading investments On February 1,...Ch. 10 - Prob. 10.6SECh. 10 - Computing rate of return on total assets Kabra's...Ch. 10 - Prob. 10.8ECh. 10 - Prob. 10.9ECh. 10 - Accounting for bond investments Otter Creek Co....Ch. 10 - Accounting for stock investments Dollar Bill...Ch. 10 - Prob. 10.12ECh. 10 - Prob. 10.13ECh. 10 - Accounting for stock investments Suppose that on...Ch. 10 - Prob. 10.15ECh. 10 - Prob. 10.16ECh. 10 - A Accounting for bond investments Suppose Jenner...Ch. 10 - Prob. 10.18APCh. 10 - Accounting for stock investments The beginning...Ch. 10 - Accounting for bond investments Suppose Ritter...Ch. 10 - Classifying and accounting for stock investments...Ch. 10 - Accounting for stock investments The beginning...Ch. 10 - Prob. 10.23CPCh. 10 - Prob. 10.1CTEICh. 10 - Wild Adventure conducts tours of wildlife reserves...Ch. 10 - Prob. 10.1CTFSCCh. 10 - Prob. 10.1CTTPCh. 10 - In 150 words or fewer, explain the difference...
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