Question

On January 4, Year 1, Ferguson Company purchased 87,500 shares of Silva Company directly from one of the founders for a price of $53 per share. Silva has 350,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $236,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $817,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva. a. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1 Year1, Jan. 4 Cash Cash Dividends Dividend Revenue Income of Silva Company Investment in Silva Company Stock Notes Receivable Year 1,3 b. Determine the December 31, Year 1, balance of Investment in Silva Company Stock. During Year 1, its first year of operations, Galileo Company purchased two available-for-sale investments as follows: Security Hawking Inc. Pavlov Co. Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $60 per share and the Pavlov Co. stock had a market value of $47 per share. Galileo Company had net income of $332,000 and paid no dividends for the year ending December 31, Year 1. All of the available-for-sale investments are classified as current assets. a. Prepare the Current Assets section of the balance sheet presentation for the available-for-sale investments Shares Purchased 850 2,300 Cost $42,925 60,490 Galileo Company Balance Sheet (selected items) December 31, Year 1 Assets Current Assets: b. Prepare the Stockholders' Equity section of the balance sheet to reflect the earnings and unrealized gain (loss) for the available-for-sale investments Galileo Company Balance Sheet (selected Stockholders' Equity items) December 31, Year 1 Stockholders' Equity

Answer 1

ANSWCR Sivo co Stock alc 4631 S00 ay year nvestment 3 Soo 军S9000 . no Dividanc alc * not gn ''Can 아 ectung mound u{-tdda mbi 207 여うhous SİVA Dec 3 yo Rocaivabe alc CvA co ste cogmiiud Gralilio Conmpany Bodancr Shat Seladad uterma) Axselt 51000 Hawking Snc (gsox 6o) Pavlov, co $108,00 1S9100 (0.300 x 4 จ) : 332000 unualind Gain