Question

Exercise 15-12 Securities transactions; equlty method LO P4 Listed below are a few events and transactions of Kodax Company. 2017 Jan. 2 Purchased 28,000 shares of Grecco Co. common stock for $426,000 cash plus a broker's fee of $4,800 cash. Grecco has 70,000 shares of common stock outstanding, and its policies will be significantly influenced by Kodax. Sept. 1 Grecco declared and paid a cash dividend of $3.30 per share. Dec. 31 Grecco announced that net income for the year is $513,900. 2018 June 1 Grecco declared and paid a cash dividend of $3.90 per share. Dec. 31 Grecco announced that net income for the year is $745,400. Dec. 31 Kodax sold 12,000 shares of Grecco for $410,000 cash. Prepare journal entries to record the above transactions and events of Kodax Company. (Do not round Intermediate calculations and round your final answers to the nearest dollar amount.)

Answer 1

Credit General Journal Long team investments-Grecco Debit Date $430,800 Jand 130,800 dol Carh To Aecord pur chare d investment) १2,५०० Carh dep 1 Long (To secord Acceipt of cauh oliviolendl) 2017 #9d,400 term investnments Grecco విలSo Sec 31, kong team investnents thecuo వింక6ం do1Eaanings Bhem dong tesm investment To Aecond eguity in inveatee carnings) L09,200 Jun 1 Carh Greece l09,00 Loug term inveatments - (To second eceipt cath olivialend $98,160 Greeco Sec 31, Long team investents Easnings faem Long term investment (To hecord equity in nvcatee eaunings 98,160 do18 $410,000 Cash Dec 31, Greeco tenm inveutments $314,109 95,891 Long Gain on sale o inestment CTo Aecosd Aale inveutment) do18

Calculatien: Tan a, 2017: Long team invertmeuts Common tock + Baoker fee 426,000 + 4,800 4.30,800 Sept 1,aolt: carh =8,o00 Mhares 3.30 Per hare 92,400 Dec 31, 301: Net Sncome x(Puxcharcd Long tenm uvestments Shares Common MOCK outstanding)] S13,900 x2800 0,000)hares f205,560 17 June 1,2018 Carh 8,000 Mhares x 3.9- Per Mare l09,200 Dec 31,2018 long tesm inveet meuts 7h00 x 128,00oto000) Auare) f298,160 Bec 31,2018: Book value at date dale-DAiginal Cosr-01 Divrolendls t 2018 Sividend share o 2017 earnings 2o18 earnings $9,400 t 20S, S6o - $109200 + $298,160) tRhare 4.30,800 32,920

Book value oshares olo 732,920 X (l2,0ro0 4hares notd 8,0-o nares Purchased 314,109 Cash-Loug team investments G cdn on dale o investment $ 314,1 09 F4l0,000 95,891