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 1
Assume that Selk has a significant influence over Kildaire with its 30% share of stock.

Required:
1. Prepare journal entries to record these transactions and events for Selk. (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.

Date General Journal Debit Credit
Jan 05, 2017

Kildaire declared and paid a cash dividend of $4.80 per share.

Note: Enter debits before credits.

Date General Journal Debit Credit
Oct 23, 2017

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.

Note: Enter debits before credits.

Date General Journal Debit Credit
Dec 31, 2017

Kildaire declared and paid a cash dividend of $3.70 per share.

Note: Enter debits before credits.

Date General Journal Debit Credit
Oct 15, 2018

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.

Note: Enter debits before credits.

Date General Journal Debit Credit
Dec 31, 2018

Selk sold all of its investment in Kildaire for $1,500,000 cash.

Note: Enter debits before credits.

Date General Journal Debit Credit
Jan 02, 2019

2. Compute the carrying (book) value per share of Selk’s investment in Kildaire common stock as reflected in the investment account on January 1, 2019. (Round your answer to 1 decimal place.)

Carrying value per share

3. Compute the net increase or decrease in Selk’s equity from January 5, 2017, through January 2, 2019, resulting from its investment in Kildaire.

The in Selk's equity is

Solutions

Expert Solution


Related 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...
CP 7–4 Koss Co. Ltd. began operations on January 1, 2018. It had the following transactions...
CP 7–4 Koss Co. Ltd. began operations on January 1, 2018. It had the following transactions during 2018, 2020, and 2021. 2018 Dec. 31 Estimated uncollectible accounts as $5,000 (calculated as 2% of sales) 2020 Apr. 15 Wrote off the balance of N. Lang, $700 Aug. 8 Wrote off $3,000 of miscellaneous customer accounts as uncollectible Dec. 31 Estimated uncollectible accounts as $4,000 (1½% of sales) 2021 Mar. 6 Recovered $200 from N. Lang, whose account was written off in...
Jester Company began operations on January 1, 2018. The company had the following transactions in its...
Jester Company began operations on January 1, 2018. The company had the following transactions in its first year of business: • January 4: Owners invested $120,000 (the par value of the stock) in exchange for 20,000 shares of common stock. • February 2: Jester took out a 10-year note payable in the amount of $80,000 to pay for operating expenses. • Interest payments are due every six months, and the balance of the note will be paid off in a...
Jester Company began operations on January 1, 2018. The company had the following transactions in its...
Jester Company began operations on January 1, 2018. The company had the following transactions in its first year of business: January 4: Owners invested $120,000 (the par value of the stock) in exchange for 20,000 shares of common stock. February 2: Jester took out a 10-year note payable in the amount of $80,000 to pay for operating expenses. Interest payments are due every six months, and the balance of the note will be paid off in a lump-sum in 10...
Walter's Inc. began operations on January 15, 2018, and had the following transactions in trading securities...
Walter's Inc. began operations on January 15, 2018, and had the following transactions in trading securities during 2018 and 2019: March 1, 2018 Purchased 500 shares of Apex, Inc. common stock at $11 per share, plus a commission of $300 April 1, 2018 Purchased 1,000 shares of Basic Corp. preferred stock at $4 per share, plus a commission of $500. June 1, 2018 Received dividends of $1 per share on the Apex stock and $2 per share on the Basic...
Naxion Corporation began operations on January 2, 2018, and had the following transactions during the year:...
Naxion Corporation began operations on January 2, 2018, and had the following transactions during the year: Jan. 2 Issued 250,000 shares of $1 par value common stock at $45 per share. Total shares authorized: 1,000,000. Feb. 5 Issued 10,000 shares of $50 par, 5% cumulative preferred stock at $65 per share. Total shares authorized: 25,000. Mar. 15 Issued 150,000 shares of $1 par value common stock at $35 per share. Apr. 2 Declared a $2.50 per share cash dividend on...
(Steven’s Bikes began operations in April 2017 and had the following transactions. Owner invested $120,000 cash...
(Steven’s Bikes began operations in April 2017 and had the following transactions. Owner invested $120,000 cash and a truck worth $36,000 in exchange for stock. Paid $84,000 cash for 6 months’ rent. Purchased $300,000 of bicycle inventory on credit. Sold bicycles for cash of $507,000. The cost of the bikes sold was $180,000. Sold and invoiced bicycles to a client for $95,400. The cost of the bikes sold was $48,000. Paid $90,000 cash for an advertising campaign in connection with...
Consider the following 2017 information for your company, which began operations on January 1, 2017. (So...
Consider the following 2017 information for your company, which began operations on January 1, 2017. (So it did not exist in 2016, and therefore had no balance sheet.) - Number of units sold in 2017: 1,000 - Price per unit: $1,000 - Cost of goods sold for each unit: 65% of the price - Other expenses (except depreciation): $50,000 - On January 1, the company bought $500,000 of fixed assets. You assume these assets will last 5 years and have...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT