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Problem C-4B (50 minutes)
Part 1
1. Journal entries (assuming significant influence)
2015
Jan. 5 Long-Term Investments—Bloch.............................................200,500
Cash.....................................................................................200,500
Dec. 31 Long-Term Investments—Bloch.............................................20,500
Earnings from Long-Term Investment............................. 20,500
2016
Aug. 1 Cash...........................................................................................27,000
Long-Term Investments—Bloch...............
27,000
Record cash dividend (20,000 x $1.35).
Dec. 31 Long-Term Investments (Bloch).............................................19,500
2017
Jan. 8 Cash...........................................................................................375,000
*Investment carrying value at Jan. 7, 2017
Original cost...........................................$200,500
Less 2015 dividends.............................. (21,000)
Plus 2015 earnings................................ 20,500
Problem C-4B (Continued)
2. Carrying value per share (see computations in part 1)
3. Change in Brinkley’s equity
Earnings from Bloch (for 2015)...........................$ 20,500
Earnings from Bloch (for 2016)........................... 19,500
Problem C-4B (Concluded)
2016
Aug. 1 Cash...........................................................................................27,000
Dec. 31 Fair Value Adjustment—AFS (LT)*..........................................35,000
2017
Jan. 8 Cash...........................................................................................375,000
Long-Term Investments—AFS (Bloch).............................200,500
Jan. 8 Unrealized Gain—Equity..........................................................72,500
2. Investment cost per share, January 7, 2017
3. Change in Brinkley's equity
Dividend Revenue (for 2015)...............................$ 21,000
Dividend Revenue (for 2016)............................... 27,000
Problem C-5B (40 minutes)
Part 1
Available-for-sale securities on December 31, 2015
Security Cost Fair Value
27,500 shares of Company R common stock.............$559,125 $568,125
6,375 shares of Company S common stock............. 231,285 210,375
Disclosure
The portfolio of available-for-sale securities would be reported on the
December 31, 2015, balance sheet at its fair fair value of $959,063.
Part 2
Dec. 31 Unrealized LossEquity..........................................................16,267
*December 31, 2014, available-for-sale securities:
Cost Fair Value
$ 559,125 $ 599,063
December 31, 2015, adjustment to the Fair Value Adjustment account:
Part 3
Only gains or losses realized on the sale of available-for-sale securities
Year 2015 realized gain (loss)
Stock Sold Cost Sale Gain (Loss)
2,125 shares of Company S stock......... $ 77,095 $ 71,055 $(6,040)
Problem C-6BA (60 minutes)
Part 1
2015
May 26 Accounts Receivable—Fuji.....................................................60,450
Sales.................................................................................... 60,450
(6,500,000 yen x $0.0093/yen)
Oct. 15 Accounts Receivable—Martinez Brothers.............................38,556
Sales.................................................................................... 38,556
(378,000 pesos x $0.1020/peso)
*Original measure = (378,000 pesos x $0.1020/peso) = $38,556
Year-end measure = (378,000 pesos x $0.1060/peso) = 40,068
Gain for the period ...............……………. = $ 1,512
Dec. 31 Accounts Receivable—Chi-Ying.............................................275
Foreign Exchange Gain*.................................................... 275
2016
Jan. 5 Cash*.........................................................................................39,500
Accounts Receivable—Chi-Ying**.................................... 36,250
Foreign Exchange Loss...........................................................794
Problem C-6BA (Concluded)
Part 2
Foreign exchange gain reported on 2015 income statement
July 25.................................................... $ (650)
December 31.......................................... 1,512
Part 3
To reduce the risk of foreign exchange gain or loss, Datamix could attempt
to negotiate foreign customer sales that are denominated in U.S. dollars.
To accomplish this, Datamix may be willing to offer favorable terms, such
NOTE: A few students may also understand the company’s opportunity for
Serial Problem — SP C
Serial Problem, Business Solutions (35 minutes)
Part 1
2016
April 16 Short-Term Investments—Trading (J&J)...................20,300
Cash.................................................................. 20,300
Purchased Johnson & Johnson shares
[(400 x $50) + $300].
Part 2 Adjusting entry at June 30, 2016
June 30 Fair Value Adjustment—Trading*......................... 850
* Fair Value Adjustment computations
Trading securities’
portfolio Shares
Share Price
at 6/30/2016
Fair
Value Cost
Unrealized
Gain (Loss)
J & J...................... 400 $55 $22,000 $20,300 $1,700
Reporting in Action — BTN C-1
1. Yes, Apple’s financial statements are consolidated. The statements are
2. Apple’s comprehensive income for the year ended September 28, 2013,
Net income............................................................................................ $37,037
Change in foreign currency translation, net of tax effects of $35............... (112)
Total change in unrecognized gains/losses on derivative instruments,
net of tax......................................................................................................
64
3. Yes. Its consolidated statement of comprehensive income does include
4. The return on total assets for the year ended September 28, 2013, ($
millions) follows:
5. Answer depends on the annual report information obtained.
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