Question

In: Accounting

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.

3

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

15

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

Dec.

15

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

Dec

31

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

31

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

31

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

Dec

31

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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