Question

Teal Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $998,800 for 45,400 shares. Kulikowski Inc, declared and paid an $0.80 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $708,000 for 2021. The fair value of Kulikowski's stock was $25 per share at December 31, 2021. Assume that the security is a trading security. Prepare the journal entries for Teal Inc. for 2020 and 2021, assuming that Teal cannot exercise significant influence over Kulikowski. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit (To record dividend.) (To record fair value.)

Answer 1

Answers Page No © Journal entries for Teed Hemed 2010 2018 Asuming that Teal cannot exercise significant influence over Kulikowski On dec 31, 2020 Equity investments - $998,800 On June 30, $0.87 Dividend revenue = 45400 shares = $ 36320 On dec 31, oprealized holding gain or loss =-998800 + (45400*25) , Credit Date dec. 3, 2020 $998800 June 30) 202) = $136200 Particulars Debit Equiliy investments (available for sale) $998800 Cash cash $36320 Dividend Yevenue . cash $36320 Dividend revenue hair value adjustment (available for sale $136200 unteliged holding gain or com – equity - $36320 dec 31, 2021 $36320 dec 31, 2021 $136200

OPI Credit 2020 Tournal entries for Teal Ine for 2020 2021 Pageino@ Assuming that Teal Pne can exercise significant inthience over Kulikowskis On dec 31, 2018 kiquity investments = $708000 1 20 % - $141600 Date . Particular Debit dec 31, Equity investments (kulikocuptor ) $998800 - Cash $998800 June 30, Cash $36320 2001 Equity investments (Kulik.wak i sfoch) - $36320 Dec.31, | . cash $36320 Equity investments (kulikowski zlache) - $36320 Dec. 31, kquity investment (Kulihowahi soch) $ !41600 2021. Povince from investments * Reporting of investment no excurities on the balance sheet fair value method = 998800 + 136200 =$1135000 2021 $141600

Page No ③ . Sain value method, provestment in securities = $1135.000 998800 - 36 320 - 36320 + 41600 = $1067760 Equilig method, investment in seewrities = $1067,460 Reporting of recebe income and the income statement fair value method, Dividend devenue - 36320 + 36320 = $ 72640 Equily method , Revenue from Covestments = $ 141600