Homework Answers
- How will ABC treat a 2019 cash dividend paid by XYZ to its shareholders?
ABC will record the dividend using the equity method, the dividend will therefore be reported as a reduction in the amount of investment in XYZ.
The equity method of accounting is used to account for an organisation's investment in another entity(investee). This method is only used when the investor have significant influence over investee. A company have significant influence over other company when it own more than 20% of voting stocks.
When ABC recieves dividend from XYZ company in which it holds 30% of shares it will be recorded as a reduction in their investment account.In other words, there is an outflow of cash from the investee which should be reflected as a reduction in investment account.
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Question 23 4 pts On 03/01/2019 ABC Company purchased 30% of the stock of XYZ Corporation...
On January 1, 2021 ABC purchased 30% of the outstanding common stock of XYZ and subsequently...
On January 1, 2021 ABC purchased 30% of the outstanding common stock of XYZ and subsequently used the equity method to account for the investment. During 2021, XYZ reported net income of $1,200,000 and distributed total dividends of $500,000. The ending balance of the investment in XYZ at December 31, 2021 was $1,000,000 after applying the equity method during 2021. What was the initial purchase price ABC paid for its investment in XYZ?
1. ABC COMPANY PURCHASED $500,000 BONDS IN XYZ COMPANY 2. ABC COMPANY PURCHASED $500,000 STOCK IN...
1. ABC COMPANY PURCHASED $500,000 BONDS IN XYZ COMPANY 2. ABC COMPANY PURCHASED $500,000 STOCK IN XYZ COMPANY 3. ABC COMPANY PURCHASED 5,000 SHARES OF ITS OWN COMMON STOCK FOR ITS TREASURY. THE PAR VALUE IS $3/SH AND THE SELLING PRICE IS $100/SH BASED ON 3. ABOVE, ABC COMPANY SOLD 1,000 SHARES OF ITS TREASURY STOCK FOR $102/SH 5. ABC COMPANY ISSUED 10,000 SHARES OF ITS COMMON STOCK FOR CASH. PV IS $3/SH AND THE SELLING PRICE IS $99/SH 6....
ABC Corporation purchased 25,000 shares of common stock of the Davison Corporation for $40 per share...
ABC Corporation purchased 25,000 shares of common stock of the Davison Corporation for $40 per share on January 2, 2018 (EQUITY METHOD). Davison Corporation had 100,000 shares of common stock outstanding during 2018, paid cash dividends of $150,000 during 2018, and reported net income of $500,000 for 2018. ABC Corporation should report revenue from investment for 2018 in the amount of ________.
4. ABC Company has 180,000 shares of common stock authorized and 50,000 shares issued and outstanding. The common stock...
4. ABC Company has 180,000 shares of common stock authorized and 50,000 shares issued and outstanding. The common stock has a $1.50 Par value and a market value of $27 per share on October 10, 2016. On October 10, 2016, ABC declares and pays a 22% stock dividend to shareholders. Record all necessary journal entries. a. Assuming this is considered a SMALL Stock Dividend, record all necessary journal entries Credit Debit Accounts Date b. Assuming this is considered a LARGE...
The shareholders' equity of Core Technologies Company on June 30, 2017, included the following: Common stock,...
The shareholders' equity of Core Technologies Company on June 30, 2017, included the following: Common stock, $1 par; authorized, 6 million shares; issued and outstanding, 1 million shares Paid-in capital-excess of par Retained earnings $ 1,800,000 4,000,000 15,000,000 On April 1, 2018, the board of directors of Core Technologies declared a 10% stock dividend on common shares, to be distributed on June 1. The market price of Core Technologies' common stock was $34 on April 1, 2018, and $44 on...
Reden Corporation purchased 30 percent of Montgomery Company’s common stock on January 1, 20X9, at underlying...
Reden Corporation purchased 30 percent of Montgomery Company’s
common stock on January 1, 20X9, at underlying book value of
$195,600. Montgomery’s balance sheet contained the following
stockholders’ equity balances:
Preferred Stock $4 par value, 42,000 shares issued and outstanding) Common Stock ($1 par value, 134,000 shares issued and outstanding) Additional Paid-In Capital Retained Earnings Total Stockholders' Equity $ 168,000 134,000 196,000 322,000 $820,000 Montgomery's preferred stock is cumulative and pays a 5 percent annual dividend. Montgomery reported net income of...
The shareholders' equity of Core Technologies Company on June 30, 2017, included the following: Common stock,...
The shareholders' equity of Core Technologies Company on June 30, 2017, included the following: Common stock, $1 par; authorized, 7 million shares; issued and outstanding, 3 million shares Paid-in capital excess of par Retained earnings $ 3.000.000 12,000,000 16.000.000 On April 1, 2018, the board of directors of Core Technologies declared a 10% stock dividend on common shares, to be distributed on June 1. The market price of Core Technologies' common stock was $36 on April 1, 2018, and $46...
II. Problem Set 1 with Options (Total 39 pts.; 3 pts each) Goebel Company purchased outstanding...
II. Problem Set 1 with Options (Total 39 pts.; 3 pts each) Goebel Company purchased outstanding shares of Dobbs Company's common stock. Under the following two independent scenarios (Situation 1 and 2), use the following information for questions 8-20. Situation 1: Goebel Company acquired a 20% interest in Dobbs Company on December 31, 2018 for $350,000. During 2019 Dobbs Company had net income of $150,000 and paid a cash dividend of $60,000. (Dobbs Company paid $60,000 cash dividend to all...
Infer from the statements the events and transactions that affected Anaconda International Corporation’s shareholders’ equity during...
Infer from the statements the
events and transactions that affected Anaconda International
Corporation’s shareholders’ equity during 2018, 2019, and 2020.
Prepare the journal entries that reflect those events and
transactions.
2018
Record sale of preferred stock.
Record sale of common stock.
Record declaration of cash dividend for preferred shares.
Record payment of cash dividend for preferred shares.
Record declaration of cash dividend for common shares.
Record payment of cash dividend for common shares.
Record transfer of net income to retained...
On January 1, 2020, Pong Company acquired 70% of the outstanding common stock of Salt Company...
On January 1, 2020, Pong Company acquired 70% of the outstanding common stock of Salt Company for $6,400,000 cash. Pong Company uses the equity method. During 2020, Salt reported $1,200,000 of net income and paid a dividend of $240,000. The stockholders' equity section of the December 31, 2019 balance sheet for Salt was as follows: Common Stock Retained Earnings $4,000,000 $5,142,857 Total Stockholders' Equity $9,142,857 Required: A. Prepare the journal entries to record the investment and the effect of Salt's...
1. ABC COMPANY PURCHASED $500,000 BONDS IN XYZ COMPANY 2. ABC COMPANY PURCHASED $500,000 STOCK IN XYZ COMPANY 3. ABC COMPANY PURCHASED 5,000 SHARES OF ITS OWN COMMON STOCK FOR ITS TREASURY. THE PAR VALUE IS $3/SH AND THE SELLING PRICE IS $100/SH BASED ON 3. ABOVE, ABC COMPANY SOLD 1,000 SHARES OF ITS TREASURY STOCK FOR $102/SH 5. ABC COMPANY ISSUED 10,000 SHARES OF ITS COMMON STOCK FOR CASH. PV IS $3/SH AND THE SELLING PRICE IS $99/SH 6....
4. ABC Company has 180,000 shares of common stock authorized and 50,000 shares issued and outstanding. The common stock has a $1.50 Par value and a market value of $27 per share on October 10, 2016. On October 10, 2016, ABC declares and pays a 22% stock dividend to shareholders. Record all necessary journal entries. a. Assuming this is considered a SMALL Stock Dividend, record all necessary journal entries Credit Debit Accounts Date b. Assuming this is considered a LARGE...
The shareholders' equity of Core Technologies Company on June 30, 2017, included the following: Common stock, $1 par; authorized, 6 million shares; issued and outstanding, 1 million shares Paid-in capital-excess of par Retained earnings $ 1,800,000 4,000,000 15,000,000 On April 1, 2018, the board of directors of Core Technologies declared a 10% stock dividend on common shares, to be distributed on June 1. The market price of Core Technologies' common stock was $34 on April 1, 2018, and $44 on...
Reden Corporation purchased 30 percent of Montgomery Company’s
common stock on January 1, 20X9, at underlying book value of
$195,600. Montgomery’s balance sheet contained the following
stockholders’ equity balances:
Preferred Stock $4 par value, 42,000 shares issued and outstanding) Common Stock ($1 par value, 134,000 shares issued and outstanding) Additional Paid-In Capital Retained Earnings Total Stockholders' Equity $ 168,000 134,000 196,000 322,000 $820,000 Montgomery's preferred stock is cumulative and pays a 5 percent annual dividend. Montgomery reported net income of...
The shareholders' equity of Core Technologies Company on June 30, 2017, included the following: Common stock, $1 par; authorized, 7 million shares; issued and outstanding, 3 million shares Paid-in capital excess of par Retained earnings $ 3.000.000 12,000,000 16.000.000 On April 1, 2018, the board of directors of Core Technologies declared a 10% stock dividend on common shares, to be distributed on June 1. The market price of Core Technologies' common stock was $36 on April 1, 2018, and $46...
II. Problem Set 1 with Options (Total 39 pts.; 3 pts each) Goebel Company purchased outstanding shares of Dobbs Company's common stock. Under the following two independent scenarios (Situation 1 and 2), use the following information for questions 8-20. Situation 1: Goebel Company acquired a 20% interest in Dobbs Company on December 31, 2018 for $350,000. During 2019 Dobbs Company had net income of $150,000 and paid a cash dividend of $60,000. (Dobbs Company paid $60,000 cash dividend to all...
Infer from the statements the
events and transactions that affected Anaconda International
Corporation’s shareholders’ equity during 2018, 2019, and 2020.
Prepare the journal entries that reflect those events and
transactions.
2018
Record sale of preferred stock.
Record sale of common stock.
Record declaration of cash dividend for preferred shares.
Record payment of cash dividend for preferred shares.
Record declaration of cash dividend for common shares.
Record payment of cash dividend for common shares.
Record transfer of net income to retained...
On January 1, 2020, Pong Company acquired 70% of the outstanding common stock of Salt Company for $6,400,000 cash. Pong Company uses the equity method. During 2020, Salt reported $1,200,000 of net income and paid a dividend of $240,000. The stockholders' equity section of the December 31, 2019 balance sheet for Salt was as follows: Common Stock Retained Earnings $4,000,000 $5,142,857 Total Stockholders' Equity $9,142,857 Required: A. Prepare the journal entries to record the investment and the effect of Salt's...
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