The beginning balance sheet of PageSource Co. included a $ 750,000 investment in Andy stock (40?%...

The beginning balance sheet of PageSource Co. included a $ 750,000 investment in Andy stock (40?% ownership, Page has significant influence over Andy?). During the? year, Page Source completed the following investment? transactions:

Mar.

Purchased 3,000 shares at $12 per share of Josh
Software common stock as a?long-term equity? investment, representing 4% ownership, no significant influence.

May

Received a cash dividend of $0.58 per share on the Josh investment.

Dec.

Received a cash dividend of $45,000
from Andy investment.

Dec

Received Andy?'s
annual report showing $110,000 of net income.

Dec

Received Josh?'s annual report showing $200,000 of net income for the year.

Dec

Andy?'s stock fair value at? year-end was $749,000.

Dec

Josh?'s common stock fair value at? year-end was $13s per share.

1.	Journalize the transactions for the year of Water Source.
2.	Post transactions to? T-accounts to determine the December? 31,2018?, balances related to the investment and investment income accounts.
3.	Prepare Water ?Source's partial balance sheet at December? 31, 2018?, from your answers in Requirement 2.
4.	Where is the unrealized holding gain or loss associated with th John stock? reported?

Solutions

Expert Solution



	Opening Investment	750000	40% ownership

	Journal Entry
3-Mar	Availabe for Sale Investment	36000
	To Cash		36000
	(3000*12)

15-May	Cash	1740
	To Dividend Income		1740
	(3000*0.58)

15-Dec	Cash	45000
	To Investment in Andy's stock		45000

31-Dec	Investment in Andy's stock	80000
	To Income in Andy's		80000
	(200000*40%)

31-Dec	Fair value adjustment in Andy's stock	36000
	To Investment in Andy's Stock		36000


31-Dec	Fair Value adjustment in Available for Sale	3000
	To Available for Sale Investment		3000
	(13-12)*3000


	T-Accounts

	Investment in Andy Stock
	Opening balance	750000	Cash	45000
	Income in Andy's stock	80000	Fair Value Adjustment in Andy's stock	36000

			Closing Balance	794000
		830000		830000

	Cash Account
	Dividend Income	1740	Available for Sale Investment	36000
	Investment in Andy's stock	45000	Closing Balance	10740

		46740		46740

	Available for Sale Investment
	Cash	45000	Fair Value adjustment in Available for Sale	3000
			Closing Balance	42000

		45000		45000


	Balance Sheet(Partial) as on 31st Dec
	Liabilities and Share capital	Amount ($)	Assets	Amount ($)
	Dividend Income	1740	Cash	10740
	Fair Value Adjustment in Andy's stock	-36000	Equity Investment :
			Investment in Andy's stock	794000

			Available for Sale Investment
			Josh Software	42000
			Fair Value adjustment in available for Sale Investment	3000

ekkarill92 answered 1 year ago

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