Question

On March 31, 2021, Chow Brothers, Inc., bought 8% of KT Manufacturing's capital stock for $53.3 million. KT's net income for the year ended December 31, 2021, was $81.1 million. The fair value of the shares held by Chow was $37.2 million at December 31, 2021. KT did not declare or pay a dividend during 2021. Required: 1. Prepare all appropriate journal entries related to the investment during 2021. 2. Assume that Chow sold the stock on January 20, 2022, for $31.1 million. Prepare the journal entries to record the sale. X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required Required 1 2 Prepare all appropriate journal entries related to the investment during 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).). Show less No Date General Journal Debit Credit 1 March 31, 20 Investment in equity securities 53.3 Cash 53.3 2 December 31 No journal entry required 3 16.1V December 31 Gain on investments (unrealized, NI) Fair value adjustment 16.1 Required 1 Required 2 >

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Answer 1

Answer:-

1)

1	march 31 2021	investment in equity securities	53.3
		Cash		53.3
2.	December 31 2021	no journal entry required
3	December 31 2021	unrealized holding loss-NI	16.1
		Fair value adjustment		16.1

2)

1	january 20 2021	unrealized holding loss-NI	6.1
		Fair value adjustment		6.1
2	january 20 2021	cash	31.1
		Fair value adjustment	22.2
		Investmebt in equity securities		53.3