On August 3, 2015, Jeffrey Corporation purchased 3,800 shares of Kevin Company for $220,400. The following...

On August 3, 2015, Jeffrey Corporation purchased 3,800 shares of Kevin Company for $220,400. The following information applies to the stock price of Kevin Company:

	Price
12/31/2015	$57
12/31/2016	$62
12/31/2017	$66

Kevin Company declares and pays cash dividends of $4 per share on June 1 of each year.

1. Record the appropriate journal entries for:
August 04, 2015
December 31, 2015
June 01, 2016
December 31, 2016
June 01, 2017
December 31, 2017

2.
8/4/2015 Record the purchase of 3,800 shares of Kevin Company for $220,400
12/31/2015 Record the fair value effects at year-end when the market price of the stock is $57 per share
6/1/2016 Record the cash dividends of $4 per share
12/31/2016 Record the fair value effects at year-end when the market price of the stock is $62 per share
6/1/2017 Record the cash dividends of $4 per share
12/31/2017 Record the fair value effects at year-end when the market price of the stock is $66 per share

3.
8/4/2015 Record the purchase of 3,800 shares of Kevin Company for $220,400
12/31/2016Record Jeffrey Corporations 35% portion of Kevin Company's $59,000 income
6/1/2016 Record the cash dividends of $4 per share
12/31/2016 Record Jeffrey Corporations 35% portion of Kevin Company's $59,000 income
6/1/2017 Record the cash dividends of $4 per share
12/31/2017 Record Jeffrey Corporations 35% portion of Kevin Company's $59,000 income

Solutions

Expert Solution

1. Record the purchase of shares in Kevin Company

Date	Account Title	Debit	Credit
8/3/2015	Investment in Kevin Company	220400
	Cash		220400

2. Record the fair value of investment in Kevin Company

Date	Account Title	Debit	Credit
12/31/2015	Unrealized gain / loss on kevin company shares	3800
	Fair value adjustment - Kevin company shares		3800
	3,800 (58.00-57.00)

3. Record the receipt of cash dividend from Kevin Company

Date	Account Title	Debit	Credit
6/1/2016	Cash	15200
	Dividend Revenue		15200

4. Record the fair value of investment in Kevin Company

Date	Account Title	Debit	Credit
12/31/2016	Fair value adjustment - Kevin company shares	19000
	Unrealized gain / loss on kevin company shares		19000
	3,800 (62.00-57.00)

5. Record the receipt of cash dividend from Kevin Company

Date	Account Title	Debit	Credit
6/1/2016	Cash	15200
	Dividend Revenue		15200

6. Record the fair value of investment in Kevin Company

Date	Account Title	Debit	Credit
12/31/2016	Fair value adjustment - Kevin company shares	15200
	Unrealized gain / loss on kevin company shares		15200
	3,800 (66.00-62.00)

ekkarill92 answered 11 months ago

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