Question

In: Accounting

Stock Investment Transactions, Equity Method and Available-for-Sale Securities Glacier Products Inc. is a wholesaler of rock...

  1. Stock Investment Transactions, Equity Method and Available-for-Sale Securities

    Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31:

    Year 1
    Jan. 18. Purchased 7,900 shares of Malmo Inc. as an available-for-sale investment at $36 per share, including the brokerage commission.
    July 22. A cash dividend of $0.45 per share was received on the Malmo stock.
    Oct. 5. Sold 2,400 shares of Malmo Inc. stock at $39 per share less a brokerage commission of $50.
    Dec. 18. Received a regular cash dividend of $0.45 per share on Malmo Inc. stock.
    Dec. 31 Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $33 per share.
    Use the valuation allowance for available-for-sale investments account in making the adjustment.
    Year 2
    Jan. 25. Purchased an influential interest in Helsi Co. for $770,000 by purchasing 38,500 shares directly from the
    estate of the founder of Helsi. There are 110,000 shares of Helsi Co. stock outstanding.
    July 16. Received a cash dividend of $0.55 per share on Malmo Inc. stock.
    Dec. 16. Received a cash dividend of $0.55 per share plus an extra dividend of $0.15 per share on Malmo Inc. stock.
    Dec. 31 Received $23,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $95,000 in Year 2.
    Glacier Products Inc. uses the equity method of accounting for its investment in Helsi Co.
    Dec. 31 Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $40 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $33 to $40 per share.

    Required:

    1. Journalize the entries to record the preceding transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. In your computations, round per share amounts to two decimal places.

    Date Description Debit Credit
    Year 1
    Jan. 18.
    July 22.
    Oct. 5.
    Dec. 18.
    Dec. 31
    Year 2
    Jan. 25.
    July 16.
    Dec. 16.
    Dec. 31-Dividends
    Dec. 31-Income
    Dec. 31-Valuation

    2. Prepare the investment-related asset and stockholders’ equity balance sheet presentation for Glacier Products Inc. on December 31, Year 2, assuming that the Retained Earnings balance on December 31, Year 2, is $562,000.

    Glacier Products, Inc.
    Balance Sheet (selected items)
    December 31, Year 2
    Current Assets:
    Investments:
    Stockholders' Equity:

Check My Work2 more Check My Work uses remaining.

Solutions

Expert Solution


Related Solutions

Stock Investment Transactions, Equity Method and Available-for-Sale Securities Glacier Products Inc. is a wholesaler of rock...
Stock Investment Transactions, Equity Method and Available-for-Sale Securities Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31: Year 1 Jan. 18. Purchased 6,300 shares of Malmo Inc. as an available-for-sale investment at $48 per share, including the brokerage commission. July 22. A cash dividend of $0.50 per share was received...
Stock Investment Transactions, Equity Method and Available-for-Sale Securities Glacier Products Inc. is a wholesaler of rock...
Stock Investment Transactions, Equity Method and Available-for-Sale Securities Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31: Year 1 Jan. 18. Purchased 7,300 shares of Malmo Inc. as an available-for-sale investment at $54 per share, including the brokerage commission. July 22. A cash dividend of $0.60 per share was received...
Stock Investment Transactions, Equity Method and Available-for-Sale Securities Glacier Products Inc. is a wholesaler of rock...
Stock Investment Transactions, Equity Method and Available-for-Sale Securities Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31: Year 1 Jan. 18. Purchased 8,000 shares of Malmo Inc. as an available-for-sale security at $48 per share, including the brokerage commission. July 22. A cash dividend of $0.55 per share was received...
Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January...
Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31: Year 1 Jan. 18. Purchased 7,300 shares of Malmo Inc. as an available-for-sale investment at $36 per share, including the brokerage commission. July 22. A cash dividend of $0.45 per share was received on the Malmo stock. Oct. 5. Sold 2,200...
Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January...
Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31: Year 1 Jan. 18. Purchased 8,300 shares of Malmo Inc. as an available-for-sale security at $42 per share, including the brokerage commission. July 22. A cash dividend of $0.55 per share was received on the Malmo stock. Oct. 5. Sold 3,700...
Sheridan Inc. has an investment in available-for-sale securities of $64000. This investment experienced an unrealized loss...
Sheridan Inc. has an investment in available-for-sale securities of $64000. This investment experienced an unrealized loss of $5700 during the current year. Assuming a 40% tax rate, the effect of this loss on comprehensive income will be
Sheridan Inc. has an investment in available-for-sale securities of $64000. This investment experienced an unrealized loss...
Sheridan Inc. has an investment in available-for-sale securities of $64000. This investment experienced an unrealized loss of $5700 during the current year. Assuming a 40% tax rate, the effect of this loss on comprehensive income will be
Missing Statement Items, Available-for-Sale Securities Highland Industries Inc. makes investments in available-for-sale securities. Selected income statement...
Missing Statement Items, Available-for-Sale Securities Highland Industries Inc. makes investments in available-for-sale securities. Selected income statement items for the years ended December 31, Year 2 and Year 3, plus selected items from comparative balance sheets, are as follows: There were no dividends. Determine the missing items. If required, use the minus sign to indicate a net or operating loss, unrealized losses, or a credit balance in the valuation allowance account. Highland Industries Inc. Selected Income Statement Items For the Years...
Missing Statement Items, Available-for-Sale Securities Highland Industries Inc. makes investments in available-for-sale securities. Selected income statement...
Missing Statement Items, Available-for-Sale Securities Highland Industries Inc. makes investments in available-for-sale securities. Selected income statement items for the years ended December 31, Year 2 and Year 3, plus selected items from comparative balance sheets, are as follows: There were no dividends. Determine the missing items. If required, use the minus sign to indicate a net or operating loss, unrealized losses, or a credit balance in the valuation allowance account. Highland Industries Inc. Selected Income Statement Items For the Years...
Some of Tollakson Corporation’s investment securities are classified as trading securities and some are classified as available-for-sale.
Some of Tollakson Corporation’s investment securities are classified as trading securities and some are classified as available-for-sale. The cost and fair value of each category at December 31, 2017, were as follows.   At December 31, 2016, the Fair Value Adjustment—Trading account had a debit balance of $3,200, and the Fair Value Adjustment—Available-for-Sale account had a credit balance of $5,750. Prepare the required journal entries for each group of securities for December 31, 2017.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT