Investments

On February 1, Rinehart Company purchased 500 shares (2% ownership ) of Givens company common stock for $32 per shares. On March 20, Rinehart Company sold 100 shares of Givens stock for $2,900. Rinehart received a divided of $1.00 per share on April 25. On June 15, Rinehart sold 200 shares of Givens stock for $7,600. On July 28, Rinehart received a divided of $1.25 per shares.

Instructions

Prepare the journal entries to record the transactions described above.

Solution

On January 1, Zabel Corporation purchased a 25% equity in Helbert corporation for $180,000. At December 31, Helbert declared and paid a $60,000 cash dividend and reported net income of $200,000.

Instructions

1. Journalize the transactions.
2. Determine the amount to be reported as an investment in Helbert stock at December 31.

Solution

Presented below are two independent situations.

1. Gambino Cosmetics acquired 10% of the 200,000 shares of common stock of Nevins Fashion at a total cost of $13 per share on March 18, 2020. On June 30, Nevins declared and paid a $60,000 dividend. On December 31, Nevins reported net income of $122,000 for the year. At December 31, the market price of Nevins Fashion was $15 per share. The stock is classified as available-for-sale
2. Kanza, Inc., obtained significant influence over Rogan Corporation by buying 40% of Rogan's 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2020. On June 15, Rogan declared and paid a cash dividend of $30,000. On December 31, Rogan reported a net income of $80,000 for the year.

Solution

Agee Company purchased 70% of the outstanding common stock of Himes Corporations.

Solution

At December 31, 2023, the trading securities for storrer; Inc. are as follows.

Instructions

1. Prepare the adjusting entry at December 31, 2023, to report the securities at fair value.
2. Show the balance sheet and income statement presentation at December 31, 2023 after adjustment to fair value

Solution

Data for investments in stock classified as trading securities are presented in E 16-10. Assume instead that the investments are classified as available-for-sale securities. The have the same cost and fair value. The securities are considered to be a long-term investment.

Solution

Uttinger Company has the following data at December 31, 2024.

The Available-for-sale securities are held as a long-term investment.

Instructions

1. Prepare the adjusting entries to report each class of securities at fair value.
2. Indicate the statement presentation of each class of securities and related unrealized gain (loss) accounts.

Solution