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The following investment transactions happened during the fiscal year ending December 31, 2018 for Dolly Company....

The following investment transactions happened during the fiscal year ending December 31, 2018 for Dolly Company.

Jan 2                         Purchased 30,000 shares of common stock of Vita Company at $10 per share, plus a brokerage fee of $3,000. Dolly Company does not have a significant influence on Vita Company, and classified this investment as long-term.

Feb 26                      Purchased 25,000 shares of common stock of Farie Inc. at $38 per share. Because this investment represents 25% of Farie’s total outstanding shares, it gives Dolly Company a significant influence over Farie Inc.

Mar 31                     Received $12,500 in dividends from Farie Inc.

Apr 19                      Received a cash dividend of $2 per share from Vita Company.

May 5                       Purchased 1,000 shares of common stock of Tartan Corp. at $22 per share. Dolly Company does not have a significant influence on Tartan Company, and classified this investment as short-term.

Jun 13                      Sold 5,000 shares of common stock of Vita Company at $11.50 per share

Jul 31                        Farie Inc. reported a net income of $400,000 for its fiscal year ending July 31, 2018.

Aug 16                     Received a cash dividend of $0.50 per share from Tartan Corp.

Sep 24                      Sold half of Tartan Corp. shares of common stock at $25 per share.

Oct 31                      Purchased $100,000, 15-year, 6% bonds at par value. Dolly Company paid a total of $100,500 for these bonds because the bonds came with $500 accrued interest as of the purchase date. Dolly Company intends to hold these bonds until maturity.

Dec 31                      Accrued interest revenue on the bonds purchased on October 31.

Dec 31                     The market values for Vita Company and Tartan Corp. shares of common stock are $9 and $24, respectively.

  1. Prepare journal entries for the above transactions.

Date

Account Title and Explanation

Debit

Credit

b) Prepare a partial income statement for Dolly Company for the year ended December 31, 2018 that starts at $700,000 for income from operations. Assume that Dolly Company’s income tax rate is 30%

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ekkarill92 answered 1 year ago
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