CHAPTER 15 Investments
Prob. 15-2A
1. 20Y6
10 Investment in Imboden Inc. Stock 720,000
Cash 720,000
31 Cash 57,600
Investment in Imboden Inc. Stock 57,600
2. No. Since Forte Inc. owns 32% (96,000 shares ÷ 300,000 shares) of the outstanding
Jan.
Dec.
CHAPTER 15 Investments
Prob. 15-3A
1.
1 Investments—Welch Co. Bonds 100,000
Interest Receivable 500
Cash 100,500
30 Cash 39,000
Loss on Sale of Investments 1,200
Interest Revenue 200
Investments—Welch Co. Bonds 40,000
* ($40,000 × 0.97) + $200
1 Cash 4,200
Interest Receivable 700
Interest Revenue 3,500
* $210,000 × 4% × 1/2
20Y3
Apr.
Nov.
*
*
CHAPTER 15 Investments
Prob. 15-3A (Concluded)
1 Cash 1,800
Interest Receivable 1,210
Interest Revenue 590
* $60,000 × 6% × 1/2
2. If the bonds are classified as available-for-sale securities, then the portfolio
of bonds would be adjusted to fair value. This would be accomplished by using
a valuation allowance account and an unrealized gain (loss) account as part of
20Y4
Mar.
*
CHAPTER 15 Investments
Prob. 15-4A
a. $238,170 (from table)
b. $(7,800) ($230,370 – $238,170, from table)
c. $230,370 ($238,170 – $7,800)
Fai
r
Issuing Company Cost
V
alue
Bernard Co. ………………………………………………
…
$ 38,250 $ 34,650
Chadwick Co. .……………………………………………
…
65,520 57,960
Gozar Inc. …………………………………………………
…
94,400 98,560
Nightline Co. ………………………………………………
…
40,000 39,200
$238,170 $230,370
CHAPTER 15 Investments
Prob. 15-4A (Concluded)
The partial balance sheets with the missing amounts are as follows:
20Y5 20Y4
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Interest receivable $ 600 —
Investment in Jolly Roger Co. stock 98,100 $ 77,000
Office equipment (net) 115,000 130,000
Total assets $813,600 $666,270
Accounts payable $ 69,400 $ 65,000
O’Brien Industries Inc.
Partial Balance Sheets
December 31
CHAPTER 15 Investments
Prob. 15-1B
1.
14 Investments—Apollo Inc. Stock 124,992
Cash 124,992
* (4,800 shares × $26 per share) + $192
1 Trading Investments—Ares Inc. 45,000
Cash 45,000
27 Cash 840
Dividend Revenue 840
* (4,800 shares – 600 shares) × $0.20
Oct. 15 Cash 106,800
Loss on Sale of Investments 2,568
Investments—Apollo Inc. Stock 109,368
* (4,200 shares × $25.50 per share) – $300
** 4,200 shares × ($124,992 ÷ 4,800 shares)
20Y8
Feb.
Apr.
*
*
*
**
CHAPTER 15 Investments
Prob. 15-1B (Concluded)
14 Trading Investments—Athena Inc. 78,000
Cash 78,000
2.
Current assets:
Trading investments (at cost) $95,000
V
aluation allowance for trading investments 19,500
Trading investments (at fair value) $114,500
*$45,000 + $50,000
** $6,300 (from 20Y8) + $13,200 (from 20Y9)
3. Unrealized gains or losses are reported on the income statement, often as “Other
Revenue (Losses).” For 20Y8, Zeus Inc. would have reported an unrealized gain
20Y9
Mar.
December 31, 20Y9
Balance Sheet (selected items)
Zeus Inc.
*
**
CHAPTER 15 Investments
Prob. 15-2B
1. 20Y3
25 Investment in Helsi Co. Stock 800,000
Cash 800,000
31 Cash 38,000
Investment in Helsi Co. Stock 38,000
2. No. Since Glacier Products Inc. owns 30% (75,000 shares ÷ 250,000 shares) of the
outstanding stock of Helsi Co., Glacier Product Inc.’s investment in Helsi Co.’s
Jan.
Dec.
CHAPTER 15 Investments
Prob. 15-3B
1.
1 Investments—Smoke Bay Bonds 90,000
Interest Receivable 900
Cash 90,900
1 Cash 2,700
Interest Receivable 900
Interest Revenue 1,800
* $90,000 × 6% × 1/2
1 Cash 840
Interest Receivable 70
Interest Revenue 770
* $42,000 × 4% × 1/2
31 Interest Receivable 1,950
Interest Revenue 1,950
Accrued interest.
* $78,000 × 6% × 5 ÷ 12
Dec.
Nov.
20Y5
Aug.
Apr.
*
*
*
CHAPTER 15 Investments
Prob. 15-3B (Concluded)
1 Cash 2,340
Interest Receivable 1,950
Interest Revenue 390
* $78,000 × 6% × 1/2
2. If the bonds are classified as available-for-sale securities, then the portfolio
of bonds would need to be adjusted to fair value. This would be recorded
20Y6
Feb.
*
CHAPTER 15 Investments
Prob. 15-4B
a. $147,200 (from table)
b. $4,680 ($151,880 – $147,200, from table)
c. $151,880 (from table)
Fai
r
Issuing Company Cost
V
alue
Alvarez Inc. ………………………………………………………………..
.
$ 36,480 $ 39,840
Hirsch Inc. …………………………………………………………………. 54,720 49,400
d. $240 ($24,000 × 4% × 3/12)
e. $81,200 [$69,200 + ($80,000 × 30%) – $12,000]
f. $604,320 (same as total liabilities and stockholders’ equity)