Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 6, Problem 10P
To determine
Identify the appropriate answer for the given statement from the given choices.
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Sunland Corporation purchased 400 shares of Sherman Inc. common stock for $12,400 (Sunland does not have significant influence).
During the year, Sherman paid a cash dividend of $3.00 per share. At year-end, Sherman stock was selling for $31.50 per share.
Assume the stock is nonmarketable.
Prepare Sunland's 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)
(b)
(c)
Debit
Credit
Indigo Corporation purchased 370 shares of Sherman Inc. common stock for $13,100 (Indigo does not have significant influence).
During the year, Sherman paid a cash dividend of $3.00 per share. At year-end, Sherman stock was selling for $37.50 per share.
Assume the stock is nonmarketable.
Prepare Indigo's 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.)
Swifty Corporation purchased 400 shares of Sherman Inc. common stock for $14,100 (Swifty 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 $35.50 per share.
Assume the stock is nonmarketable.
Prepare Swifty's 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)
(b)
(c)
Equity Investments
Cash
Cash
Dividend Revenue
Fair Value Adjustment
Unrealized Holding Gain or Loss -Income
Debit
14,100
1,300
100
Credit
14,100
1,300
100
Chapter 6 Solutions
Advanced Accounting
Ch. 6 - Prob. 1QCh. 6 - Prob. 2QCh. 6 - When is a firm required to consolidate the...Ch. 6 - Prob. 4QCh. 6 - Prob. 5QCh. 6 - Prob. 6QCh. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - Prob. 9QCh. 6 - Prob. 10Q
Ch. 6 - Prob. 11QCh. 6 - How do noncontrolling interest balances affect the...Ch. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - Prob. 16QCh. 6 - Prob. 17QCh. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Problems 7 and 8 are based on the following...Ch. 6 - Prob. 8PCh. 6 - Bens man Corporation is computing EPS. One of its...Ch. 6 - Prob. 10PCh. 6 - Prob. 11PCh. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 37PCh. 6 - Prob. 38PCh. 6 - Prob. 39PCh. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Prob. 42P
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