Question
In: Accounting
Q5) ( 5 MARKS ) A FIRM PURCHASED( INVESTED IN ) COMMON SHARES OF XYZ CO....
Q5) ( 5 MARKS ) A FIRM PURCHASED( INVESTED IN ) COMMON SHARES OF XYZ CO. WITH FOLLOWING DETAILS NO OF COMMON SHARES BOUGHT 2000 BUYNIG PRICE $40 BROKERAGE CHARGES FOR ALL THE SHARES $200 JOURNALIZE THE FOLLOWING TRANSACTIONS A JOURNALIZE PURCHASE OF INVESTMENT STOCKS AND CALCULATE COST PER SHARE B CALCULATE COST PER SHARE C EARNED $ 3 PER SHARE AS DIVIDEND INCOME (JOURNALIZE ENTRY) D THE FIRM SOLD SHARES TO ABC CO. WITH THE FOLLOWING DETAILS NO OF SHARES SOLD TO ABC CO. 1500 BROKERAGE CHARGES FOR ALL THE SHARES $300 SELLING PRICE $45
Solutions
Expert Solution
A)
| Date | Account title | Debit | credit |
| A | Investment in XYZ CO. | 80200 | |
| Cash | 80200 |
#Working:
Cost of shares purchase = [Number of shares*price per share] +Brokerage
= [2000*40 ] +200
= 80000+200
= 80200
B)Cost per share =Total Cost of shares purchased /Number of shares
= 80200 / 2000
= $ 40.10 per share
C)
| Date | Account title | Debit | credit |
| C | Cash /Dividend receivable | 6000 | |
| Dividend revenue (2000*3) | 6000 |
D)
| Date | Account title | Debit | credit |
| D | Cash | 67200 | |
| Gain on sale of investment | 7050 | ||
| Investment in XYZ CO (1500*40.1) | 60150 |
#Working
Net cash Collected from sale of shares = [Number of shares sold *selling price]-Brokerage
= [1500*45 ] -300
= 67500-300
= 67200
ekkarill92 answered 1 year agoRelated Solutions
Farms inc. owns 4% of common shares of XYZ. co. at the beginning of the current...
Farms inc. owns 4% of common shares of XYZ. co. at the beginning
of the current year the fair value of an investment in XYZ was
$250,000. At the end of the year, the fair value had decreased to
$245,000.
What journal entry would Farms inc. record to adjust the
investment of the fair value?
On January 1, 2020, ABC Co. paid $800,000 to acquire common shares of XYZ Co., which...
On January 1, 2020, ABC Co. paid $800,000 to acquire common
shares of XYZ Co., which
represented 30% of XYZ Co.’s shares outstanding. The value of
XYZ’s net assets was
$1,850,000 on that date. The excess of the purchase price over
ABC’s share of XYZ’s net assets
is attributed to unrecorded intangibles with a 20-year life. XYZ
earned net income and
comprehensive income of $400,000 in 2020 and paid dividends of
$80,000. The investment in
XYZ had a fair value...
On January 5, 2008, Grace Co. purchased 70% of the outstanding shares of Leo Co. at...
On January 5, 2008, Grace Co. purchased 70% of the outstanding
shares of Leo Co. at a cost of P500,000. On that date, the
outstanding ordinary shares of Leo had a P700,000 balance, while
accumulated profits had a P100,000 balance. All the book values of
assets and liabilities of Leo approximated their fair values except
for an equipment which was understated by P50,000
For the year 2008, Grace sold an equipment to Leo reporting a
gain on sale of P25,000...
On January 2, 2018, Acquirer Co acquires 10,000 shares (5%) of Target Inc’s shares of common...
On January 2, 2018, Acquirer Co acquires 10,000 shares (5%) of
Target Inc’s shares of common stock for $42 a share. Acquirer held
the Target shares until January 9, 2020 when it sells the stock for
$48 a share. Target reported the following earnings/loss per share,
paid the following cash dividends per share, and the trading price
of each share of its common stock are as follows: Year
Earnings/Loss per share 12/31/Cash Dividends per sh Fair Mkt Value
12/31 per...
ON JANUARY 1, 2016 FLORIDA PURCHASED ALL THE OUTSTANDING COMMON SHARES OF SUNSHINE CO FOR $3,500,000...
ON JANUARY 1, 2016 FLORIDA PURCHASED ALL THE OUTSTANDING COMMON
SHARES OF SUNSHINE CO FOR $3,500,000 CASH.AT THE DATE OF
ACQUISITION, SUNSHINE EQUITY ACCOUNTS HAD THE FOLLOWING
BALANCES:
COMMON STOCK$500,000
PAID IN CAPITAL$1,800,000
RETAINED EARNINGS$700,000
ALL OF SUNSHINE'S ASSETS WERE FAIRLY STATED EXCEPT FOR THE
FOLLOWING:
EQUIPMENT: BOOK VALUE $180,000, FAIR VALUE $270,000, EST LIFE 5
YEARS
BUILDING: BOOK VALUE $600,000, FAIR VALUE $800,000, EST LIFE 10
YEARS
SUNSHINE ALSO HAD A COPYRIGHT WITH A FAIR VALUE OF $160,000 WITH...
On January 1st, 2018, MTU Inc. purchased 25,000 of the 100,000 common shares of Blizzard Co....
On January 1st, 2018, MTU Inc. purchased 25,000 of the 100,000
common shares of Blizzard Co. for $14 per share. Blizzard declared
a dividend of $30,000 on June 30th, 2018. On Dec. 31, 2018,
Blizzard reported net income of $400,000 and the fair market value
of its stock at that point in time was $18 per share.
Prepare all necessary journal entries relating to this
investment for MTU Inc.
On January 1, 2017, Wayne Co. purchased 80,000 shares (40%) of the common stock of Grayson...
On January 1, 2017, Wayne Co. purchased 80,000 shares (40%) of
the common stock of Grayson Corp., paying $1,000,000. At that time
Grayson Corp. book value was $2,250,000. Grayson had a equipment
undervalued by $100,000 and a useful life of 5 years. Any other
excess fair value from this transaction was attributable to good
will. During 2015, Grayson reported income of $400,000 and paid
dividends of $160,000. At the close of business on 12/31/2017,
Wayne Co. sold 10,000 shares (or...
On 1 january 2018, Abc Co purchased assets of XYZ Co at auction for $1,560,000. An...
On 1 january 2018, Abc Co purchased assets of XYZ Co at auction
for $1,560,000. An independent appraisal of the fair value of the
assets acquired is listed below:
Land $171,600
Building $514, 800
Equipment $600,000
Inventories $429,000
On 1 september 2018, ABC Co exchanged land and cash of $8000 for
a plant. The land had a book value of $55,000 and a fair value of
$60,000. The exchange has commercial susbtance.
On 31 November 2018, ABC co sold equipment...
On December 31, 2019, Akron, Inc., purchased 5 percent of Zip Company's common shares on the...
On December 31, 2019, Akron, Inc., purchased 5 percent of Zip
Company's common shares on the open market in exchange for $17,100.
On December 31, 2020, Akron, Inc., acquires an additional 25
percent of Zip Company's outstanding common stock for $95,000.
During the next two years, the following information is
available for Zip Company:
Income
Dividends Declared
Common Stock
Fair Value (12/31)
2019
$313,000
2020
$68,000
$6,600
380,000
2021
85,000
14,400
470,000
At December 31, 2020, Zip reports a net...
On December 31, 2016, Akron, Inc. purchased 5 Percent of Zip Company's common shares on the...
On December 31, 2016, Akron, Inc. purchased 5 Percent of Zip
Company's common shares on the open market in exchange for $15,500.
On December 31, 2017, Akron, Inc., acquires an additional 25
percent of Zip Company's outstanding common stock for $95,000.
During the next two years, the following information is
available for Zip Company:
Income
Dividends
Declared
Common
Stock
Fair Value (12/31)
2016
$325,000
2017
$82,000
$7,400
380,000
2018
94,000
14,800
477,000
At December 31, 2017, Zip reports a net...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- A gas mixture containing 80.0 mole% N2 and the balance n-hexane flows through a pipe at...
- I need the results of the F1 and F2 generation using Punnet Square for: 1. Monohybrid...
- A gas mixture contains 20.0 mole% H2O(v) and 80.0 mole% N2. The gas temperature and absolute...
- 1. All of the economic thinkers that we have covered so far, including the mercantilists, the...
- TCA cycles, starting from two pyruvates to 6 CO2, generate 2 ATP, 8 NADH, and 2...
- What are some ethical issues that an organization may face when entering the global market? Do...
- Course Name: Professional Communication Required: Make six slide presentation TOPIC: Corona Virus has impacted the entire...
ADVERTISEMENT