Question

Heidebrecht Design acquired 30% of the outstanding common stock of Blossom Company on January 1, 2020, by paying $844,000 for the 42,200 shares. Blossom declared and paid $0.20 per share cash dividends on March 15, June 15, September 15, and December 15, 2020. Blossom reported net income of $381,500 for the year. At December 31, 2020, the market price of Blossom common stock was $26 per share.

Prepare the journal entries for Heidebrecht Design for 2020 assuming Heidebrecht Design cannot exercise significant influence over Blossom. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
choose a transaction date                                                                      Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

  

  

Prepare the journal entries for Heidebrecht Design for 2020, assuming Heidebrecht Design can exercise significant influence over Blossom. Use the equity method. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
choose a transaction date                                                                      Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

  

  

Indicate the balance sheet and income statement account balances at December 31, 2020, under each method of accounting.

		Cost Method		Equity Method
Stock Investments		$enter a dollar amount		$enter a dollar amount
Dividend revenue		enter a dollar amount		enter a dollar amount
Unrealized gain income		enter a dollar amount		enter a dollar amount
Revenue from stock investments		enter a dollar amount		enter a dollar amount

Answer 1

Answer:

Answer-1:
Assuming Glaser cannot exercise significant influence over Nickels
Cost method is used and Nickels common stock is classified as a trading security
Date	Account Title	Debit	Credit
Jan.01	Investment in Nickeles Company	$    844,000
	Cash		$    844,000
Mar.15	Cash	8,440
	Dividend revenue		8,440
Jun.15	Cash	8,440
	Dividend revenue		8,440
Sep.15	Cash	8,440
	Dividend revenue		8,440
Dec.15	Cash	8,440
	Dividend revenue		8,440
Dec.15	Investment in Nickeles Company	253,200
	Fair value gain		253,200

Answer-2:
Assuming Glaser can exercise significant influence over Nickels
Equity method is used.
Date	Account Title	Debit	Credit
Jan.01	Investment in Nickeles Company	$    844,000
	Cash		$    844,000
Mar.15	Cash	8,440
	Investment in Nickeles Company		8,440
Jun.15	Cash	8,440
	Investment in Nickeles Company		8,440
Sep.15	Cash	8,440
	Investment in Nickeles Company		8,440
Dec.15	Cash	8,440
	Investment in Nickeles Company		8,440
Dec.15	Investment in Nickeles Company	114,450
	Share of results in associate company		114,450

Answer-3:

Cost method

Investment in Nickels Company $1,097,200 (balance sheet)

Fair value gain on investments $253,200 (income statement)

Dividend revenue $33,760 (income statement)

Equity method

Investment in Nickels Company $924,690 (balance sheet)

Share of results in associate company $114,450 (income statement)