Kramer Corporation had the following long-term Investment transactions. Prepare the journal entries Kramer Corporation should record for these transactions and events. Jan 2 Purchased 5,000 shares of Optic, Inc. for $42 per share plus $7,000 infees and commission. These shares represent a 35% ownership of Optic. Oct 15 Received Optic, Inc. cash dividend of $2 per share. Dec 31 Optic reported a net income of $66,000 for the year.

When one company is holding shares in another company from 20% to 50% , then it is called as…

Answered: Kramer Corporation had the following…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Cosmos Corporation had the following long-term investment transactions. Year 1 January 2 Purchased 5,000 shares of Visual, Inc. for $42 per share. October 15 Received Visual, Inc. cash dividend of $2 per share. December 31 Visual reported a net loss of $66,000 for the year. Year 2 February 2 Sold 5% of the shares of Visual Inc for $7000. Prepare the journal entries Cosmos Corporation should record for these transactions and events.
Berk Company engaged in the following investment transactions during the current year. April 1 July 1 Bought 40,000 of the 100,000 outstanding shares of Apex Company for $400,000. During the year, Apex Company reported net income of $30,000, and paid dividend of $10,000. Bought a $270 million bond with 8% interest rate. The market interest rate was 6% for bonds of similar risk and maturity. Berk paid $310 million for the bonds. The company will receive interest semiannually on June 30 and December 31. The fair value of the bonds at December 31 was $240 million. Dec 31 Required: 1. Beck has significance influence over Apex's management. On December 31, how much would Berk report as the value of its investment in Apex on the balance sheet? 2. Berk intends to actively trade the bond investment. a. Prepare the journal entries related to the bond on July 1 and on December 31. b. On December 31, how much would Berk report as the value of the bond on The balance sheet Please avoid…
The following equity investment transactions were completed by Romero Company during a recent year: Apr. 10 Purchased 5,000 shares of Dixon Company for a price of $25 per share plus a brokerage commission of $75. July 8 Received a quarterly dividend of $0.60 per share on the Dixon Company investment. Sept. 10 Sold 2,000 shares for a price of $22 per share less a brokerage commission of $120. Journalize the entries for these transactions. Refer to the Chart of Accounts for exact wording of account titles.
For Year 1, prepare any journal and adjusting entries related to the investment in Band Inc.
The following equity investment transactions were completed by Romero Company during a recent year:Apr. 10. Purchased 5,000 shares of Dixon Company for a price of $25 per share plus a brokerage commission of $75.July 8. Received a quarterly dividend of $0.60 per share on the Dixon Company investment.Sept. 10. Sold 2,000 shares for a price of $22 per share less a brokerage commission of $120.Journalize the entries for these transactions.
At the beginning of the year, Corporation A purchased 8,000 shares of Corporation B's common stock for $40 per share. B reported net income of $120,000 for the year and paid dividends of $45,000. As of December 31, the market value of B's common stock was $42 per share. Assuming the shares owned by Company A represent 10% of the total outstanding stock of Company B, how much income should A report from its investment in B for the year if the shares are considered trading securities? $4,500 $12,000 $20,500
Parent Co. invested $1,000,000 in Sub Co. for 25% of its outstanding stock. Sub Co. pays out 40% of net income in dividends each year. Instructions Use the information in the following T-account for the investment in Sub to answer the following questions. Investment in Sub Co. 1,000,000 110,000 44,000 a. How much was Parent Co.'s share of Sub Co.'s net income for the year? b. What was Sub Co.'s total net income for the year? c. What was Sub Co.'s total dividends for the year? d. How much was Parent Co.'s share of Sub Co.'s dividends for the year?
Selk Steel Company, which began operations in Year 1, had the following transactions and events in its long-term investments.Year 1 January 5 Selk purchased 40,000 shares (20% of total) of Kildaire's common stock for $1,400,000. October 23 Kildaire declared and paid a cash dividend of $3.80 per share. December 31 Kildaire’s net income for the year is $1,170,000, and the fair value of its stock at December 31 is $42 per share. Year 2 October 15 Kildaire declared and paid a cash dividend of $2.70 per share. December 31 Kildaire’s net income for the year is $1,181,000, and the fair value of its stock at December 31 is $46 per share. Year 3 January 2 Selk sold 2% (equal to 800 shares) of its investment in Kildaire for $67,400 cash. Assume that although Selk owns 20% of Kildaire’s outstanding stock, circumstances indicate that it does not have a significant influence over the investee.Required:Prepare journal entries to record the preceding transactions and events…
On January 1, Year 5, Anderson Corporation paid $864,000 for 27,000 (20%) ofthe outstanding shares of Carter Inc. The investment was considered to be one of significantinfluence. In Year 5, Carter reported profit of $102,000; in Year 6, its profit was $112.00O. Dividends paidwere $67,000 in each of the two years. Required A Calculate the balance in Anderson's investment account as at December 31, Year 6.
Selk Steel Company, which began operations in Year 1, had the following transactions and events in its long-term investments. Year 1 January 5 Selk purchased 60,000 shares (20% of total) of Kildaire's common stock for $1,560,000. October 23 Kildaire declared and paid a cash dividend of $3.20 per share. December 31 Kildaire's net income for the year is $1,164,000, and the fair value of its stock at December 31 is $30.00 per share. Year 2 October 15 Kildaire declared and paid a cash dividend of $2.60 per share. December 31 Kildaire's net income for the year is $1,476,000, and the fair value of its stock at December 31 is $32.00 per share. Year 3 January 2 Selk sold 3% (equal to 1,800 shares) of its investment in Kildaire for $54,200 cash.
Selk Steel Co., which began operations in Year 1, had the following transactions and events in its longterm investments. Year 1 Jan. 5 Selk purchased 60,000 shares (20% of total) of Kildaire’s common stock for $1,560,000. Oct. 23 Kildaire declared and paid a cash dividend of $3.20 per share. Dec. 31 Kildaire’s net income for the year is $1,164,000, and the fair value of its stock at December 31 is $30.00 per share. Year 2 Oct. 15 Kildaire declared and paid a cash dividend of $2.60 per share. Dec. 31 Kildaire’s net income for the year is $1,476,000, and the fair value of its stock at December 31 is $32.00 per share. Year 3 Jan. 2 Selk sold 3% (equal to 1,800 shares) of its investment in Kildaire for $54,200 cash. Required Prepare journal entries to record these transactions and events for Selk. Assume that Selk has a significant influence over Kildaire with its 20% share of stock.
Aylmer Corp has the following transactions relating to investments. Aylmer Corp has a December 31 year end. 01-Sep-19 Aylmer Corp purchased 3,100 shares of Belmont Inc at $13.00 per share. 31-Oct-19 Belmont Inc paid dividends of $5.00 per share. 31-Dec-19 Belmont Inc shares had a fair value of $12.00 per share. 31-Dec-19 Belmont Inc reported net income of $63,000 for the year. 01-Mar-20 Aylmer Corp sold all of Belmont Inc shares for $17.00 per share. Additional Information: Assume Aylmer Corp uses the fair value through other comprehensive income (FV-OCI) method to account for its investments. Dividend income is required to be recorded in a separate account. REQUIRED: Prepare the appropriate entries for the above transactions.

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