XYZ purchased $100,000 equity interest in Z-Tech, Inc, on January 1, 2020. On November 30. 2020,...

XYZ purchased $100,000 equity interest in Z-Tech, Inc, on January 1, 2020. On November 30. 2020, Z-Tech paid dividends of $3,000 to XYZ. At December 31, 2020, XYZ's holdings in Z-Tech is valued at $101,000. Prepare the entries necessary to record (1) the purchase of the investment, (2) the receipt of dividends and (3) year-end adjusting entry assuming that XYZ uses the Available for Sale method to account for this investment.

Solutions

Expert Solution

Date	Accounts title	Dr	Cr
Jan 1 2020	Available for sale securities- Z tech	$100000
	Cash		100000
	(being investment made in securities recorded)

Nov 30 2020	Cash	3000
	Dividend Revenue		3000
	(being dividend revenue recived recorded)

Dec 31 2020	Fair value adjustment-AFS	1000
	Unrealized gain on securities-Other comprehensive Income	1000
	(being unrealized gain recorded on AFS securities)
	101000-100000
	Note if Fair value adjsutment-AFS account title is not there than you can use Available for sale securities
	If any doubt please comment

ekkarill92 answered 1 year ago

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