Question

Selk Steel Co., which began operations in Year 1, had the following transactions and events in its long. term investments. Problem 15-5A Accounting for long-term investments in stock with significant influence Year 1 Jan. 5 Selk purchased 60.000 shares (20% of total) of Kildaire's common stock for $1,560,000. Oct. 23 Kildaire declared and paid a cash dividend of $3.20 per share. Dec. 31 Kildaire's net income for the year is $1,164,000, and the fair value of its stock at December 31 is $30.00 per share. P5 Year 2 Oct. 15 Dec. 31 Kildaire declared and paid a cash dividend of $2.60 per share. Kildaire's net income for the year is $1,476,000, and the fair value of its stock at December 31 is $32.00 per share. Year 3 Jan. 2 Selk sold 3% (equal to 1.800 shares) of its investment in Kildaire for $54,200 cash. Required Prepare journal entries to record these transactions and events for Selk. Assume that Selk has a significant influence over Kildaire with its 20% share of stock. Refer to the transactions in Problem 15-5A. Assume that although Selk owns 20% of Kildaire's outstand- ing stock, circumstances indicate that it does not have a significant influence over the investee. Accounting for long-term investments in stock without significant influence Required Prepare journal entries to record the preceding transactions and events for Selk.

I need help with 15-6A please

Answer 1

No	Date	General Journal	Debit	Credit
	Year 1
1)	Jan-05	Long term investments - Kildaire	$ 1,560,000
		Cash		$ 1,560,000
		(To record purchase of common stock )
2)	Oct-23	Cash	$ 192,000
		Long term investments - Kildaire		$ 192,000
		(60,000 shares * $ 3.20 per share )
		(To record cash dividend paid on 60,000 shares )
3)a)	Dec-31	Long term investments - Kildaire	$ 232,800
		Earning from long term investment ($ 1,164,000*20%)		$ 232,800
		(To record 20 % income transferred )
3)b)	Dec-31	Long term investments - Kildaire
		Gain on long term investment (see note 1 )	$ 240,000
		(To record gain on investment )		$ 240,000
	Year 2
4)	Oct-15	Cash
		Long term investments - Kildaire	$ 156,000
		(60,000 shares * $ 2.60 per share )		$ 156,000
		(To record cash dividend paid on 60,000 shares )
5)a)	Dec-31	Long term investments - Kildaire	$ 295,200
		Earning from long term investment ($ 1,476,000*20%)		$ 295,200
		(To record 20 % income transferred )
5)b)	Dec-31	Long term investments - Kildaire	$ 120,000
		Gain on long term investment (see note 2 )		$ 120,000
		(To record gain on investment )
6)	Jan-02	Cash	$ 54,200
		Loss on sale of long term investment (Note 4 )	$ 8,800
		Long term investments - Kildaire		$ 63,000
		(To record loss on sale of long term investments)

Note 1 :
To calculate the gain on long term investment on Dec 31, Year 1 :
Particulars	Amount($)
Fair value of stock
(60,000 shares * $ 30 per share )	$ 1,800,000
less: Cost of stock	($1,560,000)
Gain on long term investment	$ 240,000
Note 2 :
To calculate the gain on long term investment on Dec 31, Year 2 :
Particulars	Amount($)
Fair value of stock	$ 1,920,000
(60,000 shares * $ 32 per share )
less: Cost of stock ($1,560,000+240,000)	($ 1,800,000)
Gain on long term investment	$ 120,000
Note 3 :
To calculate the cost of Long term investments of 1800 shares :
Cost of Long term investments (for 60,000 shares)	$ 2,100,000
(1560,000-192,000+232,800+
240,000)-$ 156,000+295,200+120,000)
Cost of Long term investments (for 1800 shares)	$ 63,000
($ 2,100,000* 1800/60,000 shares )
Note 4 :
To calculate Loss on sales of long term investments :
Cost of long term investments (Note 3 )	$ 63,000
Less: Sale of long term investment (given )	($ 54,200)
Loss on sale of long term investments	$ 8,800