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 | |||
The Trendy Clothing Corporation reported the following transactions for the year 2019: Jan. 1Purchased 35% of...
The Trendy Clothing Corporation reported the following transactions for the year 2019: Jan.1Purchased 35% of the common shares of Cool Hoodies Corporation for $550,000. This is a long-term investment giving Trendy Clothing significant influence over the operations of Cool Hoodies. Sept. 30Received a $34,000 dividend on the Cool Hoodies Corporation stock. Dec. 31Cool Hoodies Corporation reported net income of $167,500 for the year ended December 31, 2019. Dec. 31Trendy Clothing sold 50% of the Cool Hoodies shares for $300,000. Prepare...
Jan. 1Purchased 35% of the common shares of Cool Hoodies Corporation for $700,000, This is a long term investment giving Trendy Clothing significant influence over the operations of Cool Hoodies Sept. 30Received a $42,000 dividend on the Cool Hoodies Corporation stock Dec. 31Cool Hoodies Corporation reported net income of $176,200 for the year ended December 31, 2019 Dec. 31Trendy Clothing sold 50% of the Cool Hoodies shares for $400,000 Prepare journal entries to record all the above events for the...
Page Break Question 1 (25 marks) Unit 8 - Investments The Trendy Clothing Corporation reported the following transactions for the year 2019: Jan.1Purchased 35% of the common shares of Cool Hoodies Corporation for $700,000. This is a long-term investment giving Trendy Clothing significant influence over the operations of Cool Hoodies. Sept. 30Received a $42,000 dividend on the Cool Hoodies Corporation stock. Dec. 31Cool Hoodies Corporation reported net income of $176,200 for the year ended December 31, 2019. Dec. 31Trendy Clothing...
Question 2 (25 marks) Unit 8 - Investments The Trendy Clothing Corporation reported the following transactions for the year 2019: Jan.1 Purchased 35% of the common shares of Cool Hoodies Corporation for $550,000. This is a long-term investment giving Trendy Clothing significant influence over the operations of Cool Hoodies. Sept. 30 Received a $34,000 dividend on the Cool Hoodies Corporation stock. Dec. 31 Cool Hoodies Corporation reported net income of $167,500 for the year ended December 31, 2019. Dec....
Question 1 (25 marks) Unit 8 - Investments Mohammad Nurul islam The Trendy Clothing Corporation reported the following transactions for the year 2019: Jan. 1Purchased 35% of the common shares of Cool Hoodies Corporation for $700,000 This is a long term investment giving Trendy Clothing significant influence over the operations of Cool Hoodies Sept. 30Received a $412,000 dividend on the Cool Hoodies Corporation stock Dec 31Cool Hoodies Corporation reported net income of $176.200 for the year ended December 31, 2019...
The Trendy Clothing Corporation reported the following transactions for the year 2019: Jan.1 Purchased 35% of the common shares of Cool Hoodies Corporation for $700,000. This is a long-term investment giving Trendy Clothing significant influence over the operations of Cool Hoodies. Sept. 30 Received a $42,000 dividend on the Cool Hoodies Corporation stock. Dec. 31 Cool Hoodies Corporation reported net income of $176,200 for the year ended December 31, 2019. Dec. 31 Trendy Clothing sold 50% of the Cool...
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...
2020 Final Version B.docx Insert Layout References Review View Help Open in Desktop App Tell me what you want to do Editing Palatino Linoty... 11 А А" B T U ON A A E Edir Page Break Question 2 (25 marks) Unit 8 - Investments The Trendy Clothing Corporation reported the following transactions for the year 2019: Jan. 1Purchased 35% of the common shares of Cool Hoodies Corporation for $550,000 This is a long-term investment giving Trendy Clothing significant influence...
Why is understanding the extent to which one company influences another company important for accounting purposes? What impact does the degree of influence have on accounting? When the equity method is used to account for a stock investment, dividends received are recorded as a reduction to the Investment account and the investor's share of income reported by the investee is treated as an increase in the Investment account. Explain why the investment is accounted for in this fashion.
At a total cost of $6,030,000, Herrera Corporation acquired 224,000 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 800,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: A. Journalize the entries by Herrera Corporation on December 31 to record the following information (refer to the Chart of Accounts for exact wording of account titles): 1. Tran Corp. reports net...