Question

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 sold 50% of the Cool Hoodies shares for $400,000. Prepare journal entries to record all the above events for the Trendy Clothing Corporation Debit Credit Jan 1 S.)

Answer 1

Credi Preparation of Journal Entries Date General Journal Jan-01 Investment in cool Hoodies Cash Debit 7,00,000 $ $ 7,00,000 $ 42,000 Sep-30 Bank Dividend $ $ 42,000 Dec-31 No Entry $ 4,00,000 Dec-31 Cash Investment in cool Hoodies Gain On Sale of Investments (700000*50% $ $ 3,50,000 50,000 * Kindly Comment down for any clarifications/ queries and please upvote.