College Accounting, Chapter 1-15 (Looseleaf) - With Access
23rd Edition
ISBN: 9780357252260
Author: HEINTZ
Publisher: CENGAGE L
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Chapter 5, Problem 8RQ
To determine
Indicate the purpose of
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Indigo Corporation purchased for $277,000 a 30% interest in Murphy, Inc. This investment enables Indigo to exert significant
influence over Murphy. During the year, Murphy earned net income of $183,000 and paid dividends of $64,000.
Prepare Indigo's journal entries related to this investment. (List all debit entries before credit entries. 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 O for the
amounts.)
Account Titles and Explanation
(To record the purchase.)
(To record the net income.)
(To record the dividend.)
Debit
Credit
Indigo Corporation purchased for $277,000 a 30% interest in Murphy, Inc. This investment enables Indigo to exert significant
influence over Murphy. During the year, Murphy earned net income of $183,000 and paid dividends of $64,000.
Prepare Indigo's journal entries related to this investment. (List all debit entries before credit entries. 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 O for the
amounts.)
Account Titles and Explanation
(To record the purchase.)
(To record the net income.)
(To record the dividend.)
Debit
Credit
Cheyenne Corporation purchased 400 shares of Sherman Inc. common stock for $12,900 (Cheyenne does not have significant
influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $37.00 per
share.
Prepare Cheyenne' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value
adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. 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 O for the amounts.)
No. Account Titles and Explanation
(a)
Debt Investments
Cash
(b)
Cash
Dividend Revenue
(c)
Fair Value Adjustment
Unrealized Holding Gain or Loss - Income
Debit
Credit
Chapter 5 Solutions
College Accounting, Chapter 1-15 (Looseleaf) - With Access
Ch. 5 - The matching principle in accounting requires the...Ch. 5 - Prob. 2TFCh. 5 - LO1 As part of the adjustment of supplies, an...Ch. 5 - LO1 Depreciable cost is the difference between the...Ch. 5 - LO1 The purpose of depreciation is to record the...Ch. 5 - LO1 The purpose of depreciation is to (a) spread...Ch. 5 - Prob. 2MCCh. 5 - Prob. 3MCCh. 5 - Prob. 4MCCh. 5 - The first step in preparing a work sheet is to (a)...
Ch. 5 - On December 31, the trial balance indicates that...Ch. 5 - LO2 When posting adjusting entries to the general...Ch. 5 - Prob. 3CECh. 5 - Prob. 4CECh. 5 - LO5 Using the following partial work sheet...Ch. 5 - Prob. 6CECh. 5 - Prob. 1RQCh. 5 - Prob. 2RQCh. 5 - Prob. 3RQCh. 5 - Prob. 4RQCh. 5 - Prob. 5RQCh. 5 - Prob. 6RQCh. 5 - Prob. 7RQCh. 5 - Prob. 8RQCh. 5 - What is an assets depreciable cost?Ch. 5 - Prob. 10RQCh. 5 - Prob. 11RQCh. 5 - Identify the five major column headings on a work...Ch. 5 - List the five steps taken in preparing a work...Ch. 5 - Prob. 14RQCh. 5 - Explain when revenues are recorded under the cash...Ch. 5 - Prob. 16RQCh. 5 - ADJUSTMENT FOR SUPPLIES On December 31, the trial...Ch. 5 - Prob. 2SEACh. 5 - ADJUSTMENT FOR WAGES On December 31, the trial...Ch. 5 - ADJUSTMENT FOR DEPRECIATION OF ASSET On December...Ch. 5 - CALCULATION OF BOOK VALUE On June 1, 20--, a...Ch. 5 - ANALYSIS OF ADJUSTING ENTRY FOR SUPPLIES Analyze...Ch. 5 - Prob. 7SEACh. 5 - POSTING ADJUSTING ENTRIES Two adjusting entries...Ch. 5 - WORK SHEET AND ADJUSTING ENTRIES A partial work...Ch. 5 - JOURNALIZING ADJUSTING ENTRIES From the...Ch. 5 - Prob. 11SEACh. 5 - ANALYSIS OF NET INCOME OR NET LOSS ON THE WORK...Ch. 5 - CASH, MODIFIED CASH, AND ACCRUAL BASES OF...Ch. 5 - ADJUSTMENTS AND WORK SHEET SHOWING NET INCOME The...Ch. 5 - ADJUSTMENTS AND WORK SHEET SHOWING A NET LOSS...Ch. 5 - JOURNALIZE AND POST ADJUSTING ENTRIES FROM THE...Ch. 5 - Prob. 17SPACh. 5 - ADJUSTMENT FOR SUPPLIES On July 31, the trial...Ch. 5 - ADJUSTMENT FOR INSURANCE On July 1, a six-month...Ch. 5 - ADJUSTMENT FOR WAGES On July 31, the trial balance...Ch. 5 - ADJUSTMENT FOR DEPRECIATION OF ASSET On July 1,...Ch. 5 - CALCULATION OF BOOK VALUE On January 1, 20--, a...Ch. 5 - ANALY SIS OF ADJUSTING ENTRY FOR SUPPLIES Analyze...Ch. 5 - ANALY SIS OF ADJUSTING ENTRY FOR INSURANCE Analyze...Ch. 5 - POSTING ADJUSTING ENTRIES Two adjusting entries...Ch. 5 - WORK SHEET AND ADJUSTING ENTRIES A partial work...Ch. 5 - JOURNALIZING ADJUSTING ENTRIES From the...Ch. 5 - EXTENDING ADJUSTED BALANCES TO THE INCOME...Ch. 5 - Prob. 12SEBCh. 5 - CASH, MODIFIED CASH, AND ACCRUAL BASES OF...Ch. 5 - Prob. 14SPBCh. 5 - Prob. 15SPBCh. 5 - JOURNALIZE AND POST ADJUSTING ENTRIES FROM THE...Ch. 5 - CORRECTING WORK SHEET WITH ERRORS A beginning...Ch. 5 - Delia Alvarez, owner of Delias Lawn Service, wants...Ch. 5 - Prob. 1MPCh. 5 - Prob. 1CP
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- Crane Corporation purchased 360 shares of Sherman Inc. common stock for $11,800 (Crane does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $34.50 per share. Prepare Crane' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. 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 O for the amounts.) No. Account Titles and Explanation Debit Credit (a) (b) (c)arrow_forwardIndigo Corporation purchased trading investment bonds for $65,000 at par. At December 31, Indigo received annual interest of $2,600, and the fair value of the bonds was $62,200. Prepare Indigo' journal entries for (a) the purchase of the investment, (b) the interest received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. 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 O for the amounts.) No. Account Titles and Explanation Debit Credit (a) (b) (c)arrow_forwardSwifty Corporation purchased trading investment bonds for $40,000 at par. At December 31, Swifty received annual interest of $1,600, and the fair value of the bonds was $37,600. Prepare Swifty' journal entries for (a) the purchase of the investment, (b) the interest received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (List all debit entries before credit entries. 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 O for the amounts.) No. Account Titles and Explanation Debit Credit (a) (b) (c)arrow_forward
- about investment securities owned by a company, what do we mean by “significant influence”?arrow_forwardwhat is the working capital?arrow_forwardStatement of Financial position as at September 30 for 2023 and 2024 Assets 2023 2024 Cash and equivalents………………………………………. $56,100 $37,694 Receivables, Trade, less allowances of $1,104 and $991 respectively 47,753 37,645 Other Receivables…………………………………………………… 233 516 Inventories…………………………………………………………… 29,587 23,202 Prepaid expenses and other………………………………………….. 4,739 4,143 Total current assets…………………………………………………... 138,412 103,200 Property, plant and equipment, at cost………………………………. 314,880 298,609 Less accumulated depreciation………………………………………. (225,406) (211,494) Property, plant and equipment net…………………………………… 89,474 87,115 Other assets Goodwill……………………………………………………………...…arrow_forward
- Swifty Corporation had 2025 net income of $1,169,000. During 2025, Swifty paid a dividend of $2 per share on 87,850 shares of preferred stock. During 2025, Swifty had outstanding 301,000 shares of common stock. Compute Swifty's 2025 earnings per share. (Round answer to 2 decimal places, e.g. 3.56.) Earnings per share GA $ per sharearrow_forwardGFH Decorators, a partnership, had the income and expenses shown in the spreadsheet below for the current tax year. Identify whether each item is an "Ordinary Business Income" item (reported on Page 1, Form 1065), a "Separately Stated Item" (reported on Schedule K, Form 1065), or both. Enter the value of ordinary income items in column C and the value of separately stated items in column D. Note that not all the cells in either column C or D will have values. If a response is zero, leave the cell blank.Use a minus sign to enter negative values. A B C D 1 Ordinary Business Income Separately Stated Items 2 Fee revenue $600,000 3 Dividend income $2,000 4 Capital gain distributions $10,000 5 Charitable contributions (cash) ($500) 6 Salaries to employees ($150,000) 7 Partner guaranteed payments ($75,000) 8 MACRS depreciation on office furniture ($3,000) 9 Total ordinary business income $0arrow_forwardexplain why preferred stock is referred to as a "hybrid security"?arrow_forward
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