Type
Solution Manual
Book Title
Financial Accounting Fundamentals 5th Edition
ISBN 13
978-0078025754

978-0078025754 Appendix C Solution Manual Part 4

March 26, 2020
Problem C-3B (Concluded)
Part 2
12/31/2015
12/31/2016
12/31/2017
Long-Term AFS Securities (cost)...............
$117,773
$92,580
$126,260
Problem C-4B (50 minutes)
Part 1
1. Journal entries (assuming significant influence)
2015
Jan. 5
Long-Term InvestmentsBloch ................................
200,500
Cash ................................................................
200,500
Purchased Bloch shares.
Aug. 1
Cash ..........................................................................................
21,000
($82,000 x 25%).
2016
Aug. 1
Cash ..........................................................................................
27,000
Long-Term InvestmentsBloch ................................
27,000
Record cash dividend (20,000 x $1.35).
Record equity in investee’s earnings
($78,000 x 25%).
2017
Sold Bloch shares.
*Investment carrying value at Jan. 7, 2017
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
1. Journal entries (assuming NO significant influence)
2015
Jan. 5
Long-Term InvestmentsAFS (Bloch) ................................
200,500
Cash ................................................................
200,500
Problem C-4B (Concluded)
2016
Aug. 1
Cash ..........................................................................................
27,000
Dividend Revenue .............................................................
27,000
Received cash dividends (20,000 x $1.35).
2. Investment cost per share, January 7, 2017
3. Change in Brinkley's equity
Dividend Revenue (for 2015) ..............................
$ 21,000
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
Part 2
Dec. 31
Unrealized LossEquity ........................................................
16,267
Unrealized GainEquity .........................................................
29,313
Fair Value AdjustmentAFS (LT)* ................................
45,580
*December 31, 2014, available-for-sale securities:
Cost
Fair Value
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
appear on the 2015 income statement. Unrealized gains or losses appear
in the equity section of the balance sheet.
Year 2015 realized gain (loss)
Stock Sold
Cost
Sale
Gain (Loss)
Problem C-6BA (60 minutes)
Part 1
2015
May 26
Accounts ReceivableFuji ................................
60,450
Sales ................................................................
60,450
(6,500,000 yen x $0.0093/yen)
June 1
Cash ..........................................................................................
64,800
Oct. 15
Accounts ReceivableMartinez Brothers ............................
38,556
Sales ................................................................
38,556
(378,000 pesos x $0.1020/peso)
Dec. 6
Accounts ReceivableChi-Ying ................................
35,975
Sales ................................................................
35,975
Gain for the period ...............……………. = $ 1,512
Dec. 31
Accounts ReceivableChi-Ying ................................
275
Foreign Exchange Gain* ................................
275
*Original measure = (250,000 yuans x $0.1439/yuan) = $35,975
Year-end measure = (250,000 yuans x $0.1450/yuan) = 36,250
Jan. 13
Cash* .........................................................................................
39,274
Foreign Exchange Loss ..........................................................
794
Accounts ReceivableMartinez Bros** ............................
40,068
* (378,000 pesos x $0.1039/peso) ** ($38,556 + $1,512)
Problem C-6BA (Concluded)
Part 2
Foreign exchange gain reported on 2015 income statement
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.
Serial Problem SP C
Serial Problem, Business Solutions (35 minutes)
Part 1
2016
April 16
Short-Term InvestmentsTrading (J&J) ..................
20,300
Cash ................................................................
20,300
Purchased Johnson & Johnson shares
[(400 x $50) + $300].
Part 2 Adjusting entry at June 30, 2016
* Fair Value Adjustment computations
Trading securities’
portfolio
Shares
Fair
Value
Cost
Unrealized
Gain (Loss)

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