Question

Record these transactions on page 10: Year 1 Jan. 22 Purchased 22,000 shares of Sankal Inc. as an available-for-sale security at $18 per share, including the brokerage commission 8 Mar. Sep. Received a cash dividend of $0.22 per share on Sankal Inc. stock. A cash dividend of $0.25 per share was received on the Sankal stock. Sold 3,000 shares of Sankal Inc. stock at $16 per share less a brokerage commission of $75. Sankal Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $25 per share. Use the valuation allowance for available-for-sale investments account in making the 17 31 Dec. adjustment Record these transactions on page 11: Year 2 Jan 10 Mar. Sep 10 12 Purchased an influential interest in Imboden Inc. for $720,000 by purchasing 96,000 shares directly from the estate of the founder of Imboden Inc. There are 300,000 shares of Imboden Ine, stock outstanding Received a cash dividend of $0.30 per share on Sankal Inc. stock. Received a cash dividend of $0.25 per share plus an extra dividend of $0.05 per share on Sankal Inc. stock. Received 557,600 of cash dividends on Imboden Inc. stock. Imboden Inc. reported net income of $450,000 in Year 2. Forte Inc. uses the equity method of accounting for its investment in Imboden ine. Sankal Inc. is classified as an available for sale investment and is adjusted to a far value of 522 per share. Use the valuation allowance for available for sale investments account in making the adjustment for the decrease in fair value from $25 to $22 per share. Dec. 31 Dec 31 Required: 1. Jouma teenies to record these transactions. Refer to the information and the Chart of Accounts proved for the word of the answer choices for text entries 2. Prepare me vestment related asset and stockhors equity balance sheet presentation Forte Inc. on December L arsum that means Eames balance on December 31, Year 2 0 00. Refer to the Chart of Accounts and Amount Des provided for the exact wording of the answer choices for textes Lessor automatically per r ure For those bones which you must en subtracted or negative numbers use a m asin

Answer 1

1.

Date	Account Title and Explanation	Post Ref.	Debit	Credit
Year 1
Jan-22	Investments-Sankal Inc.	161	396000
	Cash (22000 x $18)	110		396000
	(To record purchase of shares)
Mar-08	Cash (22000 x $0.22)	110	4840
	Dividend revenue	612		4840
	(To record cash dividend received from Sankal Inc.)
Sep-08	Cash (22000 x $0.25)	110	5500
	Dividend revenue	612		5500
	(To record cash dividend received from Sankal Inc.)
Oct-17	Cash [(3000 x $16) - $75]	110	47925
	Loss on sale of investments	731	6075
	Investments-Sankal Inc. (3000 x $18)	161		54000
	(To record sale of investment)
Dec-31	Valuation allowance for available-for-sale investments	166	133000
	Unrealized gain (loss) on Available-for-sale Investments	350		133000
	[(22000 - 3000) x ($25 - $18)]
	(To record available-for-sale investments at fair value)
Year 2
Jan-10	Investment in Imboden Inc. stock	163	720000
	Cash	110		720000
	(To record purchase of shares in Imboden Inc.)
Mar-10	Cash (19000 x $0.30)	110	5700
	Dividend revenue	612		5700
	(To record cash dividend received from Sankal Inc.)
Sep-12	Cash (19000 x $0.30)	110	5700
	Dividend revenue	612		5700
	(To record cash dividend and extra dividend received from Sankal Inc.)
Dec-31	Cash	110	57600
	Investment in Imboden Inc. stock	163		57600
	(To record cash dividend received from Imboden Inc.)
Dec-31	Investment in Imboden Inc. stock	163	144000
	Income of Imboden Inc. ($450000 x 96000/300000)	621		144000
	(To record share in net income of Imboden Inc.)
Dec-31	Unrealized gain (loss) on Available-for-sale Investments	350	57000
	Valuation allowance for available for sale investments	166		57000
	(19000 x ($25 - $22)]
	(To record available-for-sale investments at fair value)

2.

Kindly fill in according to the amount descriptions given with the question since the same have not been posted along with the question.

Forte Inc.
Balance Sheet (selected items)
December 31, Year 2
1	Current assets:
2	Available-for-sale Investments (at cost)	342000
3	Add: Valuation allowance	76000
4	Available-for-sale Investments (at fair value)		418000
5
6	Investments:
7	Investment in Imboden Inc. stock*		806400
8
9	Stockholders' equity
10	Retained earnings**		389000
11

*Investment in Imboden Inc. stock = $720000 - $57600 + $144000 = $806400

**The balance in retained earnings is assumed to be after adjustment of OCI since nothing is mentioned in the question regarding the same. Kindly mention in comments section in case it is otherwise.