On January 1, Aivah Company purchased 2,000 common shares (25%) of Maywood Corporation as a long-term investment for$235,000. Later in the year, Maywood paid $23,000 in total cash dividends on December 15 and reported net income of $74,000 forthe year ended December 31. Determine the amount reported as an equity method investment on Aivah's December 31 balance sheet.Balance

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Answered: On January 1, Aivah Company purchased…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 14RE

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Forte Inc. produces and sells theater set designs and costumes. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Forte Inc., which has a fiscal year ending on December 31: Instructions 1. Journalize the entries to record these transactions. 2. Prepare the investment-related asset and stockholders equity balance sheet presentation for Forte Inc. on December 31, Year 2, assuming that the Retained Earnings balance on December 31, Year 2, is 389,000.
Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2016, were as follows: a. Issued 15,000 shares of 20 par common stock at 30, receiving cash. b. Issued 4, 000 shares of 80 par preferred 5% stock at 100, receiving cash. c. Issued 500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. d. Declared a quarterly dividend of 0.50 per share on common stock and 1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding. e. Paid the cash dividends declared in (d). f. Purchased 7,500 shares of Solstice Corp. at 40 per share, plus a 150 brokerage commission. The investment is classified as an available-for-sale investment. g. Purchased 8,000 shares of treasury common stock at 33 per share. h. Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for 24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment. i. Declared a 1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued. j. Paid the cash dividends to the preferred stockholders. k. Received 27,500 dividend from Pinkberry Co. investment in (h). l. Purchased 90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of 37 5. The bonds are classified as a held-to-maturity long -term investment. m. Sold, at 38 per share, 2,600 shares of treasury common stock purchased in (g). n. Received a dividend of 0 .60 per share from the Solstice Corp. investment in (f). o. Sold 1,000 shares of Solstice Corp. at 45, including commission. p. Recorded the payment of semiannual interest on the bonds issue d in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method . q. Accrued interest for three months on the Dream Inc. bonds purchased in (I). r. Pinkberry Co. recorded total earnings of 240 ,000. Equinox Products recorded equity earnings for its share of Pinkberry Co. net income. s. The fair value for Solstice Corp. stock was 39. 02 per share on December 31, 2016. The investment is adjusted to fair value , using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments h ad a beginning balance of zero. Instructions 1. Journalize the selected transactions. 2. After all of the transaction s for the year ended December 31, 201 6, had been poste d [including the transactions recorded in part (1) and all adjusting entries), the data that follows were taken from the records of Equinox Products Inc. a. Prepare a multiple-step in come statement for the year ended December 31, 201 6, concluding with earnings per share . In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were 100,000. ( Round earnings per share to the nearest cent.) b. Prepare a retained earnings statement for the year ended December 31, 20 6. c. Prepare a balance sheet in report form as of December 31, 2016.
Reporting paid-in capital The following accounts and their balances were selected from the adjusted trial balance of Point Loma Group Inc., a freight forwarder, at October 31, the end of the current fiscal year: Prepare the Paid-in capital portion of the Stockholders Equity section of the balance sheet using Method 1 of Exhibit 9. There are 375,000 shares of common stock authorized and 85,000 shares of preferred stock authorized.
Longmont Corporation earned net income of $90,000 this year. The company began the year with 600 shares of common stock and issued 500 more on April 1. They issued $5,000 in preferred dividends for the year. What is the numerator of the EPS calculation for Longmont?
Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31: Instructions 1. Journalize the entries to record the preceding transactions. 2. Prepare the investment-related asset and stockholders equity balance sheet presentation for Glacier Products Inc. on December 31, Year 2, assuming that the Retained Earnings balance on December 31, Year 2, is 700,000.
Reporting paid-in capital The following accounts and their balances were selected from the unadjusted trial balance of Point Loma Group Inc., a freight forwarder, at October 31, the end of the current fiscal year: Prepare the Paid-In Capital portion of the stockholders equity section of the balance sheet using Method 1 of Exhibit 8. There are 375,000 shares of common stock authorized and85,000 shares of preferred stock authorized.
The following equity investment transactions were completed by Romero Company during a recent year:Apr. 10. Purchased 5,000 shares of Dixon Company for a price of $25 per share plus a brokerage commission of $75.July 8. Received a quarterly dividend of $0.60 per share on the Dixon Company investment.Sept. 10. Sold 2,000 shares for a price of $22 per share less a brokerage commission of $120.Journalize the entries for these transactions.
The following equity investment transactions were completed by Vintage Company during a recent year: Apr. 10. Purchased 2,300 shares of Delew Company’s common stock for a price of $49.85 per share plus a brokerage commission of $345. Delew Company has 260,000 shares of common stock outstanding. July 8. Received a quarterly dividend of $0.25 per share on the Delew Company investment. Sept. 10. Sold 1,500 shares for a price of $45 per share less a brokerage commission of $190. Dec. 31. At the end of the accounting period, the fair value of the remaining 800 shares of Delew Company’s stock was $49.50 per share. Journalize the entries for these transactions. If an amount box does not require an entry, leave it blank. If required, round the final answers to the nearest dollar. Apr. 10 - Purchase Investments-Delew Company Stock Cash July 8 - Dividend Cash Dividend Revenue Sept. 10 - Sale Cash Loss on Sale of Investments…

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