Financial and Managerial Accounting
15th Edition
ISBN: 9780357297162
Author: Carl S. Warren; Jefferson P. Jones; William B. Tayler, Ph.D., CMA
Publisher: Cengage Learning US
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Chapter D, Problem 7E
(a)
To determine
Journalize the stock investment transactions for Company S, under the equity method.
(b)
To determine
Determine the balance of the investment-Company F stock account, as of December 31, 20Y6.
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On January 4, 20Y6, Spandella Company purchased 160,000 shares of Filington Company directly from one of the founders for a price of $30 per share. Filington has 400,000 shares outstanding, including the Spandella shares. On July 2, 20Y6, Filington paid $600,000 in total dividends to its shareholders. On December 31, 20Y6, Filington reported a net income of $1,200,000 for the year. Spandella uses the equity method in accounting for its investment in Filington.
a. Journalize the Spandella Inc. entries for the transactions involving its investment in Filington Company during 20Y6.
20Y6 Jan. 4
20Y6 July 2
20Y6 Dec. 31
b. Determine the December 31, 20Y6, balance of the investment in Filington Company stock account.
On January 4, 20Y4, Ferguson Company purchased 480,000 shares of Silva Company’s common stock directly from one of the founders for a price of $30 per share. Silva has 1,200,000 shares outstanding, including the Daniels shares. On July 2, 20Y4, Silva paid $750,000 in total dividends to its shareholders. On December 31, 20Y4, Silva reported a net income of $2,000,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva.
Required:
a.
Journalize the Ferguson Company entries for the transactions involving its investment in Silva Company during 20Y4. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
b.
Determine the December 31, 20Y4, balance of the investment in Silva Company stock account.
CHART OF ACCOUNTS…
On January 4, 20Y4, Ferguson Company purchased 480,000 shares of Silva Company's common stock directly from one of
the founders for a price of $30 per share. Silva has 1,200,000 shares outstanding, including the Daniels shares. On July 2,
20Y4, Silva paid $750,000 in total dividends to its shareholders. On December 31, 20Y4, Silva reported a net income of
$2,000,000 for the year.
a. Journalize the Ferguson Company entries for the transactions involving its investment in Silva Company during 20Y4. If
an amount box does not require an entry, leave it blank.
b. Determine the December 31, 20Y4, balance of the investment in Silva Company stock account.
Chapter D Solutions
Financial and Managerial Accounting
Ch. D - Prob. 1ECh. D - Prob. 2ECh. D - Starks Products uses the cost method to account...Ch. D - Prob. 4ECh. D - Prob. 5ECh. D - Prob. 6ECh. D - Prob. 7ECh. D - On January 1, 20Y9, Valuation Allowance for...Ch. D - The investments of Charger Inc. include a single...Ch. D - Jets Bancorp Inc. purchased a portfolio of trading...
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