Question

In: Accounting

Heritage Ltd. was organized on January 2, 2020. The following investment transactions and events occurred during...

Heritage Ltd. was organized on January 2, 2020. The following investment transactions and events occurred during the following months:

2020
Jan. 6 Heritage paid $576,500 for 50,100 shares (20%) of Port Inc. outstanding common shares.
Apr. 30 Port declared and paid a cash dividend of $1.20 per share.
Dec. 31 Port announced that its profit for 2020 was $490,000. Fair value of the shares was $11.90 per share.
2021
Oct. 15 Port declared and paid a cash dividend of $0.80 per share.
Dec. 31 Port announced that its profit for 2021 was $640,000. Fair value of the shares was $12.28 per share.
2022
Jan. 5 Heritage sold all of its investment in Port for $683,000 cash.


Assume that Heritage has a significant influence over Port with its 20% share.

1. Prepare the entries to record the preceding transactions in Heritage’s books.

a. Record the purchase in strategic investment.

b. Record the dividends received from strategic investment.

c. Record the share of profits of equity investment.

d.Record the dividends received in equity investment.

e.Record the share in profits of equity investment

f. Record sale in strategic investment.

2. Calculate the carrying value per share of Heritage’s investment as reflected in the investment account on January 4, 2022. (Round your answer to 2 decimal places.)

Carrying valve per share. __________?

3. Calculate the change in Heritage’s equity from January 2, 2020, through January 5, 2022, resulting from its investment in Port.

equity _____ by ______

Solutions

Expert Solution

1.) S.No. Date Account Titles Debit $ Credit $
a Jan.6,2020 Investment in Port Inc. 576,500
Cash 576,500
b Apr.30,2020 Cash     60,120
Investment in Port Inc.     60,120
( 50,100 x 1.20 )
c Dec.31,2020 Investment in Port Inc.     98,000
Investment revenue     98,000
( 490,000 x 20% )
d. Oct.15,2021 Cash     40,080
Investment in Port Inc.     40,080
( 50,100 x 0.80 )
e Dec.31,2021 Investment in Port Inc. 128,000
Investment revenue 128,000
( 640,000 x 20% )
f Jan.5,2022 Cash 683,000
Loss on sale of Investment     19,300
Investment in Port Inc. 702,300
( 576,500 - 60,120 + 98,000 - 40,080 + 128,000 )
2.) Carrying value per share on January 4,2022 $14.02 (702,300 / 50,100 )
3.) Change in Hertiage
Equity increased by $ 206,700 (98,000 + 128,000 - 19,300 )

Related Solutions

Hamilton Ltd. was organized on January 2, 2017. The following investment transactions and events occurred during...
Hamilton Ltd. was organized on January 2, 2017. The following investment transactions and events occurred during the following months: 2017 Jan. 6 Hamilton paid $575,500 for 50,000 shares (20%) of Wong Inc. outstanding common shares. Apr. 30 Wong declared and paid a cash dividend of $1.10 per share. Dec. 31 Wong announced that its profit for 2017 was $480,000. Fair value of the shares was $11.80 per share. 2018 Oct. 15 Wong declared and paid a cash dividend of $0.70...
Sandals Corporation was organized on January 1st 2020. The following investments transactions and events occurred during...
Sandals Corporation was organized on January 1st 2020. The following investments transactions and events occurred during the following months. TASK: Calculate and Journalized the following transaction. 2020 Jan 8​Sandals Corp intends to raise $800,000.00 for the purpose of expanding its operation internationally, as a result they issued a Bond for $800,000. The Bond was issued at 98. Jan 18​Purchased 16,000 common shares of Halcyon at $1.40 plus $500 in transaction fees Feb 27​Purchased 500 common shares of Zoom at $103.00,...
Sandals Corporation was organized on January 1st 2020. The following investments transactions and events occurred during...
Sandals Corporation was organized on January 1st 2020. The following investments transactions and events occurred during the following months. TASK: Calculate and Journalized the following transaction. 2020 Jan 8               Sandals Corp intends to raise $800,000.00 for the purpose of expanding its operation internationally, as a result they issued a Bond for $800,000. The Bond was issued at 98. Jan 18             Purchased 16,000 common shares of Halcyon at $1.40 plus $500 in transaction fees Feb 27            Purchased 500 common shares of...
HHH company was opened on January 1, 2020. The following selected events and transactions occurred during...
HHH company was opened on January 1, 2020. The following selected events and transactions occurred during January: Jan. 1 Invested €60,000 cash in the business in exchange for ordinary shares. 3 Purchased Land and equipment for €38,000 cash. The price consists of land €23,000, and equipment €15,000. (Make one compound entry.) 5 Paid for advertising expenses of €1,600. 6 Paid €2,400 for a one-year insurance policy. 10 Purchased equipment for €1,050 from Parton Company payable in 30 days. 18 Received...
an Agency organized on January 1, 2019. The following transactions occurred during the first month of...
an Agency organized on January 1, 2019. The following transactions occurred during the first month of its operation: Jan. 1: Acquired its articles of incorporation from the company and issued 10,000 shares of capital stock in exchange for cash Rs. 10, 00,000 Jan. 5: Purchased office building at Rs. 500,000 in cash. The building is valued Rs.200,000 and the remainder is assigned to the valuation of land. Jan. 7: Signed 2-year promissory note for Rs.500, 000 Jan. 10: Purchased office...
Rippa Ltd was incorporated on 1 July 2017. The following transactions and events occurred during the...
Rippa Ltd was incorporated on 1 July 2017. The following transactions and events occurred during the year ended 30 June 2018: 1 Jul 2017: Rippa Ltd makes an offer to the public for investors to subscribe for 5,000,000 shares, at an issue price of $4.00 per share, with $2.50 payable on application, $1.00 being payable within one month of allotment, and $0.50 payable on a call to be made at a later date. The issue is underwritten at a commission...
The following transactions occurred for White Rock Ltd during year ended May 31, 2020. As of...
The following transactions occurred for White Rock Ltd during year ended May 31, 2020. As of the start of the year, June 1, 2019, White Rock had $3,500 of automotive supplies on hand. During the year, it purchased $9,100 in automotive supplies. At year end, $1,300 of automotive supplies were on hand. On October 31, 2019, White Rock purchased $88,000 of automotive repair equipment on account. The equipment has an 8-year useful life. White Rock signed an agreement to rent...
Dribnor Ltd entered into the following transactions and events during 2018. Do these transactions and events...
Dribnor Ltd entered into the following transactions and events during 2018. Do these transactions and events meet the Framework 2014 definitions of assets, liabilities, equity, income or expenses? Give reasons. (a) Dribnor entered into a contract with Melbourne Metal Manufacturers Ltd to purchase capital equipment at a cost of $1 million. Dribnor paid a 10% deposit, which was non refundable. (b) Dribnor has a regular program of maintaining its plant and equipment. In order to provide for this program, it...
The following transactions and events that occurred in the village of Kowitt Gorge during the calendar...
The following transactions and events that occurred in the village of Kowitt Gorge during the calendar year 2019: 1. The village commissioners adopted the following budget: Estimated revenues: Property taxes $1,850,000 All other revenues 300,000 Total revenues $2,150,000 Appropriations: All departments other than police $1,000,000 Police—salaries 600,000 Police—fringe benefits 450,000 Police—supplies 80,000 Total appropriations $2,130,000 2. The village received, in cash, property taxes of $1,840,000 and all other revenues of $295,000. 3. The village made cash payments, charging the following...
Business Events and Transactions for September 2019: The following transactions occurred during the first week of...
Business Events and Transactions for September 2019: The following transactions occurred during the first week of September. • September 1- Pay the $3,175 August interest owed to the bank. Also make a $40,000 payment on the bank note principal. • September 1- The company purchased office supplies for the first time in September. They purchased $2,400 in supplies from Office Depot and paid for it in cash. • September 5- the company has collected $225,000 in cash on the August...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT