EXERCISE 12–12
(a) Fair Value Adjustment—Trading
Unrealized Gain or Loss—Equity ………………………………. 4,000
(b) Balance Sheet
Current assets
Income Statement
Other revenues and gains
*EXERCISE 12-13
LENNON CORPORATION AND SUBSIDIARY
Worksheet—Consolidated Balance Sheet
January 1, 2015
Assets
Lennon
Corporation
Ono
Inc.
Eliminations
Dr.
Cr.
Current assets
60,000
50,000
Investment in Ono
Inc. common stock
220,000
220,000
Plant and equipment
(net)
300,000
220,000
Totals
580,000
270,000
Liabilities and
stockholders’
equity
Current liabilities
180,000
50,000
Common stock—
Lennon Corp.
230,000
230,000
Common stock—
Ono Inc.
80,000
80,000
Retained earnings—
Lennon Corp.
170,000
Retained earnings—
Ono Inc.
140,000
140,000
0
Totals
580,000
270,000
220,000
220,000
*EXERCISE 12-14
LENNON CORPORATION AND SUBSIDIARY
Worksheet—Consolidated Balance Sheet
January 1, 2015
Assets
Lennon
Corporation
Ono
Inc.
Eliminations
Consolidated
Data
Dr.
Cr.
Current assets
55,000
50,000
105,000
Investment in Ono
Inc. common stock
225,000
225,000
0
Plant and equipment
(net)
300,000
220,000
520,000
Excess of cost over
book value
5,000
5,000
Totals
580,000
270,000
630,000
Liabilities and
stockholders’
equity
Current liabilities
180,000
50,000
230,000
Common stock—
Lennon Corp.
230,000
230,000
Common stock—
Ono Inc.
80,000
80,000
0
Retained earnings—
Lennon Corp.
170,000
170,000
Retained earnings—
Ono Inc.
140,000
140,000
0
Totals
580,000
270,000
225,000
225,000
630,000
SOLUTIONS TO PROBLEMS
PROBLEM 12–1A
(a) 2015
Jan. 1 Debt Investments ……………………………. 2,000,000
July 1 Cash ($2,000,000 X .08 X 1/2) …………… 80,000
Dec. 31 Interest Receivable …………………………. 80,000
2018
Jan. 1 Cash ………………………………………………. 80,000
July 1 Cash ($1,000,000 X .08 X 1/2) …………… 40,000
Dec. 31 Interest Receivable …………………………. 40,000
(b) 2015
Dec. 31 Fair Value Adjustment—Available-
for-Sale ………………………………………. 200,000
PROBLEM 12-1A (Continued)
(c) Balance Sheet
Current assets
Investments
and retained earnings.
PROBLEM 12–2A
(a) Feb. 1 Stock Investments …………………………….. 32,400
Mar. 1 Stock Investments …………………………….. 20,000
Apr. 1 Debt Investments ………………………………. 50,000
July 1 Cash ($.60 X 600) ………………………………. 360
Aug. 1 Cash (200 X $58) ……………………………….. 11,600
Sept. 1 Cash ($1 X 800) …………………………………. 800
Dividend Revenue ………………………. 800
Stock Investments
Debt Investments
Feb. 1 32,400
Mar. 1 20,000
Aug. 1 10,800
Apr. 1 50,000
Oct. 1 50,000
Dec. 31 Bal. 41,600
Dec. 31 Bal. 0
PROBLEM 12-2A (Continued)
(b) Dec. 31 Unrealized Loss—Income ……………………. 400
Security
Cost
Fair Value
Muninger common
Tatman common
$21,600
20,000
$41,600
$22,000
19,200
$41,200
(400 X $55)
(800 X $24)
(c) Current assets
(d)
Income Statement Account
Category
Dividend Revenue
Other revenues and gains
Gain on Sale of Stock Investments
Other revenues and gains
Interest Revenue
Other revenues and gains
Loss on Sale of Debt Investments
Other expenses and losses
Unrealized Loss—Income
Other expenses and losses
PROBLEM 12–3A
(a) 2016
July 1 Cash (5,000 X $1) ………………………………. 5,000
Aug. 1 Cash (2,000 X $.50) ……………………………. 1,000
Sept. 1 Cash (1,500 X $8) ………………………………. 12,000
Oct. 1 Cash (800 X $33) ……………………………….. 26,400
Nov. 1 Cash (1,500 X $1) ………………………………. 1,500
Dec. 15 Cash (1,200 X $.50) ……………………………. 600
31 Cash (3,500 X $1) ………………………………. 3,500
Stock Investments
2016
Jan. 1 Balance 135,000
2016
Sept. 1 13,500
Oct. 1 24,000
2016
Dec. 31 Balance 97,500
PROBLEM 12-3A (Continued)
(b) Dec. 31 Unrealized Gain or Loss—Equity
Security
Cost
Fair Value
Gehring Co. common
Wooderson Co. common
Kitselton Co. common
$36,000
31,500
30,000
$97,500
$38,400
28,000
27,000
$93,400
(1,200 X $32)
(3,500 X $ 8)
(1,500 X $18)
(c) Investments
Investments in stock of less than
Stockholders’ equity
PROBLEM 12–4A
(a) Jan. 1 Stock Investments ………………………….. 800,000
Mar. 15 Cash ……………………………………………… 9,000
June 15 Cash ……………………………………………… 9,000
Sept. 15 Cash ……………………………………………… 9,000
Dec. 15 Cash ……………………………………………… 9,000
31 Fair Value Adjustment—Trading ……… 220,000
(b) Jan. 1 Stock Investments ………………………….. 800,000
Mar. 15 Cash ……………………………………………… 9,000
June 15 Cash ……………………………………………… 9,000
Sept. 15 Cash ……………………………………………… 9,000
Dec. 15 Cash ……………………………………………… 9,000