Question

m an ansactions of Kodax Company. Year 1 Jan. 2 Purchased 87,000 shares of Grecco Co. common stock for $536,000 cash. Grecco has 261,000 shares of common stock outstanding, and its activities will be significantly influenced by Kodax. Sept. 1 Grecco declared and paid a cash dividend of $1.40 per share. Dec. 31 Grecco announced that net income for the year is $509,400. Year 2 June 1 Grecco declared and paid a cash dividend of $3.ee per share. Dec. 31 Grecco announced that net income for the year is $737,900. Dec. 31 Kodax sold 12, eee shares of Grecco for $98,800 cash. Prepare journal entries to record the above transactions and events of Kodax Company. (Do not round intermediate calculations a round your final answers to the nearest dollar amount.) View transaction list Journal entry worksheet 1 2 3 4 5 6 Purchased 87,000 shares of Grecco Co. common stock for $536,000 cash. Grecco has 261,000 shares of common stock outstanding, and its activities will be significantly influenced by Kodax. Note: Enter debits before credits General Journal Debit Credit Date Jan. 2. Year 1 77 EIR

Answer 1

	General Journal	Debit	Credit
Jan 02,Year 1	Long-term investments—Grecco	536000
	Cash		536000
Sept 01,Year 1	Cash	121800		=87000*1.40
	Long-term investments—Grecco		121800
Dec 31,Year 1	Long-term investments—Grecco	169800		=509400/261000*87000
	Earnings from long-term investment		169800
Jun 01,Year 2	Cash	261000		=87000*3
	Long-term investments—Grecco		261000
Dec 31,Year 2	Long-term investments—Grecco	245967		=737900/261000*87000
	Earnings from long-term investment		245967
Dec 31,Year 2	Cash	98000
	Long-term investments—Grecco		78478
	Gain on sale of investment		19522
	Workings:
	Cost of investment	536000
	Add: Share of net income	415767		=169800+245967
	Less: Dividends received	382800		=121800+261000
	Carrying value of investment	568967
	Carrying value of investment sold	78478		=568967/87000*12000