179.
On October 31, Augustas Co. received cash dividends of $0.15 per share from its
investment in Lamb Corp.’s common stock. Augustas owned 1,200 shares of Lamb Corp.’s
stock on October 31. The investment is considered available–for-sale. Prepare the
investor’s journal entry to record the receipt of the cash dividends.
180.
Landers, Inc., held 1,500 of Shipman Company common stock with a cost of $36,900.
These shares were classified as a long-term available-for-sale investment. It sold the
shares on December 13 for $42,100. Prepare Lander’s journal entry to record this sale.
181.
Washington Corp. held 1,500 of Vashon Company common stock with a cost of $74,387.
These shares were classified as a Long-Term available-for-sale investment. It sold the
shares on December 13 for $55,275. Prepare the journal entry to record Washington’s sale.
182.
In the current year, Logic Co. purchased bonds of Waterford Co. with a cost of $125,000
and a year-end fair value of $123,700. Logic also purchased 1,500 shares of Jasper Co.
common stock with a cost of $25,000 and a year-end fair value of $26,100. These are
classified as long-term available–for-sale securities. Prepare the journal entry to record
the market value of the investments as of its December 31 year-end.
Dec
31
Unrealized Loss—Equity
200
Fair value Adjustment—
Available-for-Sale (LT)
200
183.
In the current year, Largo Co. purchased bonds of MacDermott Corp. with a cost of
$125,000 and a market value of $127,000. Largo also purchased 1,500 shares of Armistead
common stock with a cost of $25,000 and a market value of $24,700. These are classified
as long-term available-for–sale securities. Prepare the journal entry to record the market
value of the investments as of December 31.
Dec
31
Fair value Adjustment—
Available-for-Sale (LT)
1,700
Unrealized Gain—Equity
1,700
common stock
184.
Barzetti had no investments prior to the current year. It had the following transactions
involving available–for-sale and held-to-maturity securities during the year. The stock
purchases are considered short-term available–for-sale securities. Prepare Barzetti’s
journal entries to record the transactions and events associated with the investment
purchases.
Apr.
18
Purchased 5,000 shares of Lacy Co. stock at $26.50
per share plus a $350 brokerage fee.
May
01
Purchased $200,000 of Butcher’s 7%, two-year
bonds payable at par value. Interest payments are
paid semiannually on November 1 and May 1. It is
the company’s intent to hold the bonds until
maturity.
Jun.
10
Purchased 4,000 shares of SubCo stock at $48.25
plus a $325 brokerage fee.
Nov.
01
Received a check for the first semiannual interest
payment on the Butcher’s bonds.
Nov.
15
Received a $0.65 per share cash dividend on the
Lacy Co. shares.
Nov.
30
Sold 2,000 shares of Lacy Co. stock at $29 less a
$300 brokerage fee.
Dec.
15
Received a $1.10 per share cash dividend on the
SubCo shares.
Dec.
20
Received a $.075 per share cash dividend on the
remaining Lacy Co. shares.
Dec.
31
Prepare an adjusting entry to record the fair value
adjustment on the available-for-sale securities. At
December 31, the Lacy Co. stock has a fair value of
$28 per share, and the SubCo stock has a fair value
of $49.50 per share.
Apr.
18
185.
Weston Company had the following long-term available–for-sale securities in its portfolio
at December 31, Year 1. Weston had several long-term investment transactions during the
next year. After analyzing the effects of each transaction, (1) determine the amount
Weston should report on its December 31, Year 1 balance sheet for its long-term
investments in available-for-sale securities, (2) determine the amount Weston should
report on its December 31, Year 2 balance sheet for its long-term investments in
available-for-sale securities, (3) prepare the necessary adjusting entry to record the fair
value adjustment at December 31, Year 2.
Available-for-Sale Securities (LT)
Cost
Fair
Value
40,000 shares of Beach common stock
$497,500
$488,900
15,000 shares of Danfield common
stock
410,200
412,600
18,000 shares of Cardinal common
stock
399,600
382,500
Jan. 22
Sold 9,000 shares of Cardinal common stock
for $203,000 less a brokerage fee of $850.
Mar. 17
Purchased 30,000 shares of Apex common
stock for $995,000 plus a brokerage fee of
$2,500. The shares represent a 30% ownership
in Apex.
Jun. 10
Purchased 108,000 shares of Desert Springs
common stock for $1,525,000 plus a brokerage
fee of $4,200. The shares represent a 54%
ownership in Desert Springs.
Nov. 01
Purchased 12,000 shares of Cliff common
stock for $223,500 plus a brokerage fee of
$450. The shares represent a 10% ownership.
Dec. 31
At December 31, Year 2, the fair values of its
investments are: Beach, $502,500; Danfield,
$411,800; Cardinal, $203,100; Apex,
$1,113,250; Desert Springs, $1,576,000; Cliff,
$224,750.
186.
On January 2, Froxel Company purchased 10,000 shares of Sandia Corp. common stock at
$19 per share plus a $3,000 commission. This represents 30% of Sandia Corp.’s
outstanding stock. On August 6, Sandia Corp. declared and paid cash dividends of $1.75
per share, and on December 31 it reported net income of $150,000. Prepare the necessary
entries for Froxel to account for these transactions and events.
187.
Cosmos Corporation had the following long-term investment transactions.
Jan 2
Purchased 5,000 shares of Visual, Inc. for $42
per share plus $7,000 in fees and commission.
These shares represent a 35% ownership of
Visual.
Oct 15
Received Visual, Inc. cash dividend of $2 per
share.
Dec 31
Visual reported a net loss of $66,000 for the
year.
Prepare the journal entries Cosmos Corporation should record for these transactions and
events.
Cash [(5,000 * $42) +
Long-Term
Dec.
Loss from Long-Term
Investments
Long-Term
Investments
188.
On January 3, Kostansas Corporation purchased 5,000 shares of Morton, Inc. for $40 per
share plus $700 in broker commissions. These shares represent a 40% ownership in
Morton, Inc. Prepare the journal entry Kostansas Corporation should record for the
investment transaction.
189.
On January 3, Kostansas Corporation purchased 5,000 shares of Morton, Inc. for $40 per
share plus $700 in broker commissions. These shares represent a 40% ownership in
Morton, Inc. Prepare the journal entry Kostansas Corporation should record for the receipt
of cash dividends of $2 per share from Morton on July 10.
190.
On January 3, Kostansas Corporation purchased 5,000 shares of Morton, Inc. for $40 per
share plus $700 in broker commissions. These shares represent a 40% ownership in
Morton, Inc. Prepare the journal entry Kostansas Corporation should record when Morton
reports net income of $52,000 for the year on December 31.