Question

t Stock investment transactions, equity method and available-for-sale securities mount Descrlptions Journal Balance Sheet Chart of Accounts Year 1 2 Purchased 2,00 haes of Sara avalabe toral seug brokerage commission 8 Received a cash dividend of $0.22 per share on Sankal Inc. stocik Sep. 8 A cash dividend of $0.25 per share was received on the Sankal stock Oct 17 Sold 3,000 shares of Sankal Inc. stock at st6 per share lesa brokernge commission of $75 31 Sankal Inc. is classiled as an available-for-sale investment and is adusted to a fair value of s25 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment Record these transactions on page 11 Year 2 Jan. 10 Purchased an influential interest in Imboden Inc. for $720,000 by purchasing 96,000 shares directly from the estate of the founder of Imboden Inc. There are 300,000 shares of Imboden Inc, stock putstanding Mar 10 Received a cash dividend of $0.30 per share on Sankal Inc. stock. Sep. 12 Received a cash dividend of $0.25 per share plus an extra dividend of $0.05 per share on Sankal Inc stock Dec. 31 Received $57,600 of cash dividends on Imboden Inc. stock. Imboden Inc. reported net income of $450,000 in Year 2. Forte Inc uses the equity mathod of accounting for its investment in Imboden Inc Dec. 31 Sankal Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $22 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the decrease in fair value from $25 to $22 per share. 8025 per share plus an extra dividend of $0.05 per share on Sankal Inc. stock. Dec. 31 Received $57,600 of cash dividends on Imboden Inc. stock. Imboden Inc. reported net income of $450,000 in Year 2. Forte Inc. uses the equity method of accounting for its investment in limboden Inc. Dec. Sankal Inc. is clasifited as an available-for-sale investment and is adjusted to a fair value of $22 per 31 share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the decrease in fair value from $25 to $22 per share. Required: 1. Journalize the entries to record these transactions. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries. 2. Prepare the investment-related asset and stockholders' equity balance sheet presentation for Forte Inc. on December 31, Year 2 assuming that the Retained Earnings balance on December 31, Year 2, is $389,000. Refer to the Chart of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. Less" or "Plus" will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign eck My Work Email Instructor Save and Exit CHART OF ACCOUNTS Forte Inc. General Ledger ASSETS REVENUE 110 Cash 410 Sales 111 Petty Cash 611 Interest Revenue 120 Accounts Receivable 612 Dividend Revenue 121 Allowance for Doubtful Accounts 621 Income of Imboden Inc. 131 Notes Receivable Gain on Sale of Investments 631 641 Unrealized Gain on Trading Investments 132 Interest Receivable 141 Merchandise Inventory EXPENSES 145 Office Supplies 511 Cost of Merchandise Sold 146 Store Supplies 512 Bad Debt Expense 151 Prepaid Insurance 515 Credit Card Expense 516 Cash Short and Over 163 Investment in Imboden Inc. Stock 520 Salaries Expense 165 Valuation Allowance for Trading Investments 31 Advertising Expense 166 Valuation Allowance for Available-for-Sale Investments 532 Delivery Expense 181 Land 533 Repairs Expense 191 Store Equipment 534 Selling Expenses CHat of Accounts 193 Office Equipment 535 Rent Expense 194 Accumulated Depreciation-Office Equipment 536 Insurance Expense 537 Office Supplies Expense LIABILITIES 538 Store Supplies Expense 210 Accounts Payable 561 Depreciation Expense-Store Equipment 221 Notes Payable 562 Depreciation Expense-Office Equipment 231 Interest Payable 590 Miscellaneous Expense 241 Salaries Payable 710 Interest Expense 721 Loss of Imboden Inc 251 Sales Tax Payable 731 Loss on Sale of Investments 741 Unrealized Loss on Trading Investments EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Treasury Stock 332 Paid-In Capital from Sale of Treasury Stocik 340 Retained Earnings 350 Unrealized Gain (Loss) on Available-for-Sale Investments 351 Cash Dividends 352 Stock Dividends 390 Income Summary Amount Descriptions Amount Descriptions Available-for-sale investments (at cost) Available-for-sale investments (at fair value) Net income Net loss Other comprehensive income (loss) Other income (loss) Trading investments (at cost) Trading investments (at fair value Calculator Book Journal 1a. Journalize the entries to record Year 1 transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries. PAGE 10 ACCOUNTING EQUATION JOURNAL ASSETS LIABUTES Equmr.」 CREDIT DEBIT POST REF DESCRIPTION DATE 10 1b Joumaize the entries to record Year 2 transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the intormaltion given and the Chart of Accounts provided for the exact wording of the answer cholces for text entries 1b. Journalize the entries to record Year Accounts provided for the exact wording of the answer choices for text entries transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Char PAGE 11 JOURNAL ACCOUNTING EQUATION DATE POST. REF ASSETS LIABILITIESEQUITY DEBIT CREDIT eBook Calculator Instructions Chart of A Amount Descriptions Journal Balance Sheet Sheet 2 Prepare the Investment-related asset and stockholders' e December 31, Yoar 2 io $369,000 Refer to the Char of Accounts and Amount Descnptone provided for the exact wording of the nawer choices for fext enries Les or Plust l equity balance sheet presentation for Forte Inc. on December 31, Year 2, assuming that the Retained Earmings balance on automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign Forte Inc. Balance Sheet (selected items) December 31, Year 2 1 Current assets: Investments Stockholders' equity

Answer 1

Answer :-

a.

Date	Account Title and Explanation	Debit	Credit
Year-1
Jan.22	Available for Sale Investments ($18 * 22,000) Cash	396,000	396,000
Mar.08	Cash ($0.22 * 22,000) Dividend Revenue	4,840	4,840
Sep.08	Cash ($0.25 * 22,000) Dividend Revenue	5,500	5,500
Oct.17	Cash ($16*3,000 - $75) Realized loss on sale of investments Available - for - sale investments ($18 * 3,000)	47,295 6,075	54,000
Dec.31	Valuation allowance for available for sale investment Unrealized gain on Available - for - sale investments [(22,000 - 3,000) * ($25 - $18)]	133,000	133,000
Year-2
Jan.10	Investment in Imboden Inc. Cash	720,000	720,000
Mar.10	Cash (19,000 * $0.30) Dividend Revenue	5,700	5,700
Sep.12	Cash (19,000 * $0.30) Dividend Revenue	5,700	5,700
Dec.31	Cash Investment in Imboden Inc.	57,600	57,600
	Investment in Imboden Inc. ($450,000/300,000 * 96,000) Equity Income in Imboden Inc.	144,000	144,000
	Unrealized gain on Available - for - sale investments Valuation allowance for available for sale investment [(22,000 - 3,000)*($25-$22)]	57,000	57,00

b.

FORTE INC.
Balance Sheet (Selected items)
December 31, Year 2
Current Assets :
Available for Sale Investment (at cost)	342,000
Add: Valuation Allowance for Available for sale investments	57,000
Available for sale Investment (at fair value)		399,000
Investments :
Investment in Imboden Inc
Stockholders Equity :
Retained Earnings		389,000
Unrealized Gain (loss) on Available for Sale Investments		57,000