Financial Accounting
9th Edition
ISBN: 9781259222139
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Textbook Question
Chapter A, Problem 8P
Recording Investments for Significant Influence
LO A-3 Below are selected T-accounts for William Company.
| Investments In Affiliates | |||
| 1/1 | 56,432 | ||
| Purchase | 15,685 | ||
| Share of | Share of | ||
| affiliate net | affiliate | ||
| income | ? | 8,564 | dividends |
| 12/31 | 67,450 | ||
| Equity In Affiliate Earnings | ||
| 0 ? |
1/1 Share of affiliate net income |
|
| 3,897 | 12/31 | |
Required:
Complete the following journal entries and answer the following questions:
- a. Purchased additional investments in affiliated companies for cash. Prepare the
journal entry . - b. Received cash dividends on the investments. Prepare the journal entry.
- c. At year-end, the investments in affiliates account had a fair value of $62,000; the affiliate also reported $8,120 in net income for the year. Prepare the
adjusting entry. - d. What would be reported on the
balance sheet related to the investments in affiliates on December 31? - e. What would be reported on the income statement for the year?
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Watts and Lyon are forming a partnership. Watts invests $40,500 and Lyon invests $49,500. The partners agree that Watts will work
one-fourth of the total time devoted to the partnership and Lyon will work three-fourths. They have discussed the following alternative
plans for sharing income and loss: (a) in the ratio of their initial capital investments; (b) in proportion to the time devoted to the
business; (c) a salary allowance of $15,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial
capital investments; or (d) a salary allowance of $15,000 per year to Lyon, 11% interest on their initial capital investments, and the
remaining balance shared equally. The partners expect the business to perform as follows: Year 1, $13,000 net loss; Year 2, $32,500
net income; and Year 3, $54,167 net income.
Required:
Complete the tables, one for each of the first three years, by showing how to allocate partnership income or loss to the partners under
each of…
In column A, identify the account to which element it belongs whether Current Asset (CA), Noncurrent Assets (NCA), Current Liabilities (CL), Noncurrent liabilities (NCL) or Shareholders’ equity (SHE). In column B, indicate the line item to which the account belongs. Column A Column B1. Share Capital2. Accounts Payable 3. Plant Expansion Fund4. Trading Securities 5. Employees income tax payable6. Goodwill 7. Raw Materials8. Share Premium 9. Advances from customers
10. Serial bonds not collectible currently 11. Investment in Bonds 12. Notes Payable 13. Prepaid Insurance 14. Income Tax Payable 15. Land
Chapter A Solutions
Financial Accounting
Ch. A - Prob. 1QCh. A - Explain the difference in accounting methods used...Ch. A - Explain how bonds held to maturity are reported on...Ch. A - Explain the application of the cost principle to...Ch. A - Under the fair value method, when and how does the...Ch. A - Under the equity method, why does the investor...Ch. A - Prob. 7QCh. A - Prob. 8QCh. A - Prob. 9QCh. A - Company X owns 40 percent of Company Y and...
Ch. A - Prob. 2MCQCh. A - Dividends received from stock that is reported as...Ch. A - Prob. 4MCQCh. A - Prob. 5MCQCh. A - When using the equity method of accounting, when...Ch. A - Prob. 7MCQCh. A - Prob. 8MCQCh. A - Which of the following is true regarding the...Ch. A - Prob. 10MCQCh. A - Matching Measurement and Reporting Methods Match...Ch. A - Prob. 2MECh. A - Prob. 3MECh. A - Prob. 4MECh. A - Prob. 5MECh. A - Prob. 6MECh. A - Prob. 7MECh. A - Prob. 8MECh. A - Prob. 9MECh. A - Prob. 10MECh. A - Prob. 11MECh. A - Prob. 1ECh. A - Prob. 2ECh. A - Recording Transactions in the Available-for-Sale...Ch. A - Prob. 4ECh. A - Prob. 5ECh. A - Reporting Gains and Losses in the Trading...Ch. A - Prob. 7ECh. A - Prob. 8ECh. A - Prob. 9ECh. A - Prob. 10ECh. A - Prob. 11ECh. A - Prob. 1PCh. A - Prob. 2PCh. A - Prob. 3PCh. A - Prob. 4PCh. A - Prob. 5PCh. A - Comparing Methods to Account for Various Levels of...Ch. A - Prob. 7PCh. A - Recording Investments for Significant Influence LO...Ch. A - Prob. 9PCh. A - Prob. 10PCh. A - Prob. 11PCh. A - Prob. 1APCh. A - Prob. 2APCh. A - Reporting Passive Investments During January 2017,...Ch. A - Prob. 4APCh. A - Prob. 5APCh. A - Prob. 6APCh. A - Prob. 1CONCh. A - Finding Financial Information Refer to the...Ch. A - Prob. 2CPCh. A - Prob. 3CPCh. A - Prob. 4CPCh. A - Prob. 5CPCh. A - Prob. 6CP
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