Question

Question 1 (25 marks Units Investments The Trendy Clothing Corporation reported the following for the year 2009 Jan Pawed 35% of the common shares of Cool Hodor 700.000 This is a long term wedging Ty Chaching and cover the operation of Cool Hoorn Sept. 30Received a 12.000 dividend on the Collecties Corporativo Dec 31Cool Hoodies Corporation reported income of 5176.200 for the weed December per 31. 2019 Dec. 31Trendy Clothing sold 50% of the Cool Hoodies shares for 100.000 Prepare journal entries to record all the above events for the Trendy Clothing Corporation. Uan Debit Credit English (US

Answer 1

SOLUTION:
Journal Entries
Sr. No.	Date	Account Title and explanation	Debit	Credit
1	Jan 01. 2019	Investment in Cool Hoodies	$                 7,00,000
		Cash		$                  7,00,000
		(To record the purchase of investment)
2	Sept 30. 2019	Cash	$                    42,000
		Investment in Cool Hoodies		$                      42,000
		(To record the receipt of share in dividends)
3	Dec 31. 2019	Investment in Cool Hoodies ($ 176,2000 X 35%)	$                    61,670
		Investment Revenue		$                      61,670
		(To record the revenue in investment )
4	Dec 31. 2019	Cash	$                 4,00,000
		Investment in Cool Hoodies		$                  3,59,835
		Gain on Sale of investment		$                      40,165
		(To record the sale of investment)
	Working Notes:
		Calculation of gain on sale of investment
		Purchase value of the investment	$                 7,00,000
		Add: Increase in Investment	$                    61,670
		Less: Reduction in investment (Recd Dividend)	$                    42,000
		Value of the investment as on Dec 31	$                 7,19,670
		50 % Value of investment	$                 3,59,835
		Sale Value of investment	$                 4,00,000
		Less: 50% Value of investment	$                 3,59,835
		Gain on sale of investment	$                    40,165