Question
In: Accounting
Selk Steel Co., which began operations on January 4, 2017, had the following subsequent transactions and...
Selk Steel Co., which began operations on January 4, 2017, had
the following subsequent transactions and events in its long-term
investments.
2017
| Jan. | 5 | Selk purchased 80,000 shares (30% of total) of Kildaire's common stock for $1,200,000. | ||
| Oct. | 23 | Kildaire declared and paid a cash dividend of $4.80 per share. | ||
| Dec. | 31 | Kildaire's net income for 2017 is $1,324,000, and the fair value of its stock at December 31 is $22.00 per share. |
2018
| Oct. | 15 | Kildaire declared and paid a cash dividend of $3.70 per share. | ||
| Dec. | 31 | Kildaire's net income for 2018 is $1,636,000, and the fair value of its stock at December 31 is $25.00 per share. |
2019
| Jan. | 2 | Selk sold all of its investment in Kildaire for $1,500,000 cash. |
Part 2
Assume that although Selk owns 30% of Kildaire’s outstanding stock,
circumstances indicate that it does not have a significant
influence over the investee and that it is classified as an
available-for-sale security investment.
Required:
1. Prepare journal entries to record the preceding
transactions and events for Selk. Also prepare an entry dated
January 2, 2019, to remove any balance related to the fair value
adjustment. (If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field.)
Selk purchased 80,000 shares (30% of total) of Kildaire's common stock for $1,200,000.
Note: Enter debits before credits.
Kildaire declared and paid a cash dividend of $4.80 per share. Note: Enter debits before credits.
|
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Selk Steel Co., which began operations on January 4, 2017, had the following subsequent transactions and...
Selk Steel Co., which began operations on January 4, 2017, had
the following subsequent transactions and events in its long-term
investments.
2017
Jan.
5
Selk purchased 80,000 shares (30%
of total) of Kildaire's common stock for $1,200,000.
Oct.
23
Kildaire declared and paid a cash
dividend of $4.80 per share.
Dec.
31
Kildaire's net income for 2017 is
$1,324,000, and the fair value of its stock at December 31 is
$22.00 per share.
2018
Oct.
15
Kildaire declared and paid...
Selk Steel Co., which began operations on January 4, 2017, had the following subsequent transactions and...
Selk Steel Co., which
began operations on January 4, 2017, had the following subsequent
transactions and events in its long-term investments.
2017
Jan.
5
Selk purchased
60,000 shares (20% of total) of Kildaire's common stock for
$1,560,000.
Oct.
23
Kildaire declared
and paid a cash dividend of $3.20 per share.
Dec.
31
Kildaire’s net
income for 2017 is $1,164,000, and the fair value of its stock at
December 31 is $30.00 per share.
2018
Oct.
15
Kildaire declared
and...
Selk Steel Co., which began operations in Year 1, had the following transactions and events in...
Selk Steel Co., which began operations in Year 1, had the following
transactions and events in its long-term investments.
Year 1
Jan.
5
Selk purchased 60,000 shares (20% of total) of Kildaire's
common stock for $1,320,000.
Oct.
23
Kildaire declared and paid a cash dividend of $2.20 per
share.
Dec.
31
Kildaire’s net income for the year is $1,164,000 and the fair
value of its stock at December 31 is $30 per share.
Year 2
Oct.
15
Kildaire declared and...
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