Question 1

Journalize the entries to record the following selected equity investment transactions completed by Perry Company during 2012. Perry accounts for this investment using the cost method.:

Accepted Answer

The answer of Journalize the entries to record the following...

Question 2

Pepito Company purchased 40% of the outstanding stock of Reyes Company on January 1, 2012. Reyes reported net income of $75,000 and declared dividends of $15,000 during 2012. How much would Pepito adjust their investment in Reyes Company under the equity method?

Accepted Answer

The answer of Pepito Company purchased 40% of the outstanding...

Question 3

Define (1) debt securities and (2) equity securities. Include their similarities and differences in your discussion.

Accepted Answer

The answer of Define (1) debt securities and (2) equity...

Question 4

On May 1, 2012, Chase Inc. purchases $60,000 of 10-year, Manus Corporation 8% bonds dated March 1, 2012 at 100 plus accrued interest. What entry would Chase record when receiving its semiannual interest on September 1?

Accepted Answer

The answer of On May 1, 2012, Chase Inc. purchases...

Question 5

The income statement for Dodson Corporation reported net income of $22,400 for the year ended December 31, 2012 before considering the following:
During the year the company purchased available-for-sale securities. At year end, the fair value of the investment portfolio was $2,100 more than cost.
The balance of retained earnings was $83,000 on December 31, 2011. Dobson Corporation paid $9,000 in cash dividends in 2012. Calculate the balance of retained earnings on December 31, 2012.

Accepted Answer

The answer of The income statement for Dodson Corporation reported...

Question 6

On March 1, 2011, Chase Inc. purchases 35% of the outstanding shares of Glory Corporation stock for $325,000. On December 31, 2011, Glory reports net income of $162,000. On January 15, 2012, Glory pays total dividends to stockholders of $33,000.
Required: Journalize the three transactions described above.

Accepted Answer

The answer of On March 1, 2011, Chase Inc. purchases...

Question 7

On September 1, 2012, Parsons Company purchased $84,000, 10 year, 7% government bonds at 100 plus accrued interest. The semi-annual interest payment dates are June 30 and December 31. Interest calculations are done by the month. Required:

Accepted Answer

The answer of On September 1, 2012, Parsons Company purchased...

Question 8

The income statement for Hudson Company reported net income of $345,000 for the year ended December 31, 2012 before considering the following:
During the year the company purchased trading securities. At year end, the fair value of the investment portfolio was $23,000 less than cost.
The balance of retained earnings was $823,000 on December 31, 2011. Hudson Company paid $43,000 in cash dividends in 2012. Calculate the balance of retained earnings on December 31, 2012.

Accepted Answer

The answer of The income statement for Hudson Company reported...

Question 9

On May 1, 2012, Chase Inc. purchases $60,000 of 10-year, 8% Manus Corporation bonds dated March 1, 2012 at 100 plus accrued interest. What entry would Chase record when purchasing the bonds?

Accepted Answer

The answer of On May 1, 2012, Chase Inc. purchases...

Question 10

Skyline, Inc. purchased a portfolio of available-for-sale securities during 2012. The cost and fair value of this portfolio on December 31, 2012, was as follows:
  Required:
Provide the journal entry to record the adjustment of the available-for-sale security portfolio to fair value on December 31, 2012.
Where will the information from the journal entry be reported on the financial statements?

Accepted Answer

The answer of Skyline, Inc. purchased a portfolio of available-for-sale...

Question 11

On January 1, 2012, Valuation Allowance for Trading Investment has a zero balance . On December 31, 2012, the cost of trading securities portfolio was $52,400, and the fair value was $53,000.
Required:
Prepare the December 31, 2012, adjusting journal entry to record the unrealized gain or loss on trading investments.

Accepted Answer

The answer of On January 1, 2012, Valuation Allowance for...

Question 12

Journalize the entries to record the following selected equity investment transactions completed by Flurry Company during 2012. Flurry's purchase represents less than 20% of the total outstanding Braxter stock.

Accepted Answer

The answer of Journalize the entries to record the following...

Question 13

On January 1, 2012, Valuation Allowance for Available-for-Sale Investments had a zero balance. On December 31, 2012, the cost of the available-for-sale securities was $48,700, and the fair value was $39,200. Prepare the adjusting entry to record the unrealized gain or loss for available-for-sale investments on December 31, 2012.

Accepted Answer

The answer of On January 1, 2012, Valuation Allowance for...

Question 14

Ramiro Company purchased 40% of the outstanding stock of Marco Company on January 1, 2012. Marco reported net income of $80,000 and declared dividends of $20,000 during 2012. How much would Ramiro adjust their investment in Marco Company under the equity method?

Accepted Answer

The answer of Ramiro Company purchased 40% of the outstanding...

Question 15

On April 1, 2012, ValueTime, Inc. had a market price per common share of $32. For the previous year ValueTime paid a dividend of $1.20 per share. Compute the dividend yield for ValueTime, Inc.

Accepted Answer

The answer of On April 1, 2012, ValueTime, Inc. had...

Question 16

On October 1, 2012, Marcus Corporation purchased $20,000 of 6% bonds of Roberts Corporation, due in 8 1/2 years. The bonds were purchased at a price of $17,561 plus interest of $300 accrued from July 1, 2012, the date of the last semi-annual interest payments. Journalize the purchase.

Accepted Answer

The answer of On October 1, 2012, Marcus Corporation purchased...

Question 17

Skyline, Inc. purchased a portfolio of trading securities during 2012. The cost and fair value of this portfolio on December 31, 2012, was as follows:
  Required:
Provide the journal entry to record the adjustment of the trading security portfolio to fair value on December 31, 2012.
Where will the information from the journal entry be reported on the financial statements?

Accepted Answer

The answer of Skyline, Inc. purchased a portfolio of trading...

Question 18

On May 1, 2012, Chase Inc. purchases $60,000 of 10-year, Manus Corporation 8% bonds dated March 1, 2012 at 100 plus accrued interest. What entry would Chase record when receiving its semiannual interest on March 1, 2013?

Accepted Answer

The answer of On May 1, 2012, Chase Inc. purchases...

Question 19

During 2012, its first year of operations, Makala Company purchased two available-for-sale investments as follows:
  Assume that as of December 31, 2012, the Oceanna Company stock had a market value of $49 per share and Rockledge, Inc. stock had a market value of $20 per share.
Makala had 10,000 shares of no par stock outstanding that was issued for $150,000. For the year ending December 31, 2012, Makala had a net income of $105,000. No dividends were paid.
Required:

Accepted Answer

The answer of During 2012, its first year of operations,...

Question 20

Sutton Company purchased 10% of the outstanding stock of Roberts Company on January 1, 2012. Reyes reported net income of $155,000 and declared dividends of $40,000 during 2012. How would these events be reported by Sutton using the cost method?

Accepted Answer

The answer of Sutton Company purchased 10% of the outstanding...

Quiz 13: Investments and Fair Value Accounting

Journalize the entries to record the following selected equity investment transactions completed by Perry Company during 2012. Perry accounts for this investment using the cost method.:

Pepito Company purchased 40% of the outstanding stock of Reyes Company on January 1, 2012. Reyes reported net income of $75,000 and declared dividends of $15,000 during 2012. How much would Pepito adjust their investment in Reyes Company under the equity method?

Define (1) debt securities and (2) equity securities. Include their similarities and differences in your discussion.

On May 1, 2012, Chase Inc. purchases $60,000 of 10-year, Manus Corporation 8% bonds dated March 1, 2012 at 100 plus accrued interest. What entry would Chase record when receiving its semiannual interest on September 1?

On September 1, 2012, Parsons Company purchased $84,000, 10 year, 7% government bonds at 100 plus accrued interest. The semi-annual interest payment dates are June 30 and December 31. Interest calculations are done by the month. Required:

On May 1, 2012, Chase Inc. purchases $60,000 of 10-year, 8% Manus Corporation bonds dated March 1, 2012 at 100 plus accrued interest. What entry would Chase record when purchasing the bonds?

Journalize the entries to record the following selected equity investment transactions completed by Flurry Company during 2012. Flurry's purchase represents less than 20% of the total outstanding Braxter stock.

Ramiro Company purchased 40% of the outstanding stock of Marco Company on January 1, 2012. Marco reported net income of $80,000 and declared dividends of $20,000 during 2012. How much would Ramiro adjust their investment in Marco Company under the equity method?

On April 1, 2012, ValueTime, Inc. had a market price per common share of $32. For the previous year ValueTime paid a dividend of $1.20 per share. Compute the dividend yield for ValueTime, Inc.

On October 1, 2012, Marcus Corporation purchased $20,000 of 6% bonds of Roberts Corporation, due in 8 1/2 years. The bonds were purchased at a price of $17,561 plus interest of $300 accrued from July 1, 2012, the date of the last semi-annual interest payments. Journalize the purchase.

On May 1, 2012, Chase Inc. purchases $60,000 of 10-year, Manus Corporation 8% bonds dated March 1, 2012 at 100 plus accrued interest. What entry would Chase record when receiving its semiannual interest on March 1, 2013?

Sutton Company purchased 10% of the outstanding stock of Roberts Company on January 1, 2012. Reyes reported net income of $155,000 and declared dividends of $40,000 during 2012. How would these events be reported by Sutton using the cost method?