Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company. Cost method: Cost method is the accounting method used for accounting stock or equity investments which claim less than 20% of the outstanding stock of the investee company. Journal entry : Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. Debit and credit rules: Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts. Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts. To journalize: The stock investment transactions in the books of Corporation S, under the cost method

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Answer 1

Question

Chapter 15, Problem 15.6EX

(a)

To determine

Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.

Cost method: Cost method is the accounting method used for accounting stock or equity investments which claim less than 20% of the outstanding stock of the investee company.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The stock investment transactions in the books of Corporation S, under the cost method

(b)

To determine

To Prepare: journal entry for the dividend received from Corporation E for 12,000 shares.

(c)

To determine

To Prepare: Journal entry for sale of 4,000 shares of Corporation E at $62, with a brokerage of $100.

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Answer 2

Question

Chapter 15, Problem 15.6EX

(a)

To determine

Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.

Cost method: Cost method is the accounting method used for accounting stock or equity investments which claim less than 20% of the outstanding stock of the investee company.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The stock investment transactions in the books of Corporation S, under the cost method

(b)

To determine

To Prepare: journal entry for the dividend received from Corporation E for 12,000 shares.

(c)

To determine

To Prepare: Journal entry for sale of 4,000 shares of Corporation E at $62, with a brokerage of $100.

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Answer 3

Question

Chapter 15, Problem 15.6EX

(a)

To determine

Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.

Cost method: Cost method is the accounting method used for accounting stock or equity investments which claim less than 20% of the outstanding stock of the investee company.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The stock investment transactions in the books of Corporation S, under the cost method

(b)

To determine

To Prepare: journal entry for the dividend received from Corporation E for 12,000 shares.

(c)

To determine

To Prepare: Journal entry for sale of 4,000 shares of Corporation E at $62, with a brokerage of $100.

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Answer 4

Question

Chapter 15, Problem 15.6EX

(a)

To determine

Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.

Cost method: Cost method is the accounting method used for accounting stock or equity investments which claim less than 20% of the outstanding stock of the investee company.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The stock investment transactions in the books of Corporation S, under the cost method

(b)

To determine

To Prepare: journal entry for the dividend received from Corporation E for 12,000 shares.

(c)

To determine

To Prepare: Journal entry for sale of 4,000 shares of Corporation E at $62, with a brokerage of $100.

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Answer 5

Chapter 15, Problem 15.6EX

(a)

To determine

Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.

Cost method: Cost method is the accounting method used for accounting stock or equity investments which claim less than 20% of the outstanding stock of the investee company.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The stock investment transactions in the books of Corporation S, under the cost method

(b)

To determine

To Prepare: journal entry for the dividend received from Corporation E for 12,000 shares.

(c)

To determine

To Prepare: Journal entry for sale of 4,000 shares of Corporation E at $62, with a brokerage of $100.

Answer 6

Chapter 15, Problem 15.6EX

(a)

To determine

Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.

Cost method: Cost method is the accounting method used for accounting stock or equity investments which claim less than 20% of the outstanding stock of the investee company.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The stock investment transactions in the books of Corporation S, under the cost method

Answer 7

Chapter 15, Problem 15.6EX

(a)

To determine

Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.

Cost method: Cost method is the accounting method used for accounting stock or equity investments which claim less than 20% of the outstanding stock of the investee company.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The stock investment transactions in the books of Corporation S, under the cost method

Answer 8

(b)

To determine

To Prepare: journal entry for the dividend received from Corporation E for 12,000 shares.

Answer 9

(b)

To determine

To Prepare: journal entry for the dividend received from Corporation E for 12,000 shares.

Answer 10

(c)

To determine

To Prepare: Journal entry for sale of 4,000 shares of Corporation E at $62, with a brokerage of $100.

Answer 11

(c)

To determine

To Prepare: Journal entry for sale of 4,000 shares of Corporation E at $62, with a brokerage of $100.

Answer 12

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Answer 23

Ch. 15 - Why might a business invest cash in temporary...Ch. 15 - What causes a gain or loss on the sale of a bond...Ch. 15 - When is the equity method the appropriate...Ch. 15 - How does the accounting for a dividend received...Ch. 15 - Prob. 5DQ Ch. 15 - What is the major difference in the accounting for...Ch. 15 - Prob. 7DQ Ch. 15 - How would a debit balance in Unrealized Gain...Ch. 15 - What are the factors contributing to the trend...Ch. 15 - Prob. 10DQ

Solution Summary: The author explains the cost method used for accounting stock or equity investments which claim less than 20% of the outstanding stock. Journal entry is a set of economic events recorded chronologically and systematically.

Concept explainers

To Prepare: journal entry for the dividend received from Corporation E for 12,000 shares.

To Prepare: Journal entry for sale of 4,000 shares of Corporation E at $62, with a brokerage of $100.

Chapter 15 Solutions