Listed below are a few events and transactions of Kodax Company. 2017 Jan. 2 Purchased 24,960...

Listed below are a few events and transactions of Kodax Company.

2017

Jan.	2	Purchased 24,960 shares of Grecco Co. common stock for $409,000 cash plus a broker’s fee of $3,100 cash. Grecco has 96,000 shares of common stock outstanding, and its policies will be significantly influenced by Kodax.
Sept.	1	Grecco declared and paid a cash dividend of $1.60 per share.
Dec.	31	Grecco announced that net income for the year is $488,400.

2018

June	1	Grecco declared and paid a cash dividend of $2.20 per share.
Dec.	31	Grecco announced that net income for the year is $702,900.
Dec.	31	Kodax sold 8,000 shares of Grecco for $325,000 cash.

Prepare journal entries to record the above transactions and events of Kodax Company. (Do not round intermediate calculations and round your final answers to the nearest dollar amount.)
Journal entry worksheet

Purchased 24,960 shares of Grecco Co. common stock for $409,000 cash plus a broker’s fee of $3,100 cash. Grecco has 96,000 shares of common stock outstanding, and its policies will be significantly influenced by Kodax.

Date	General Journal	Debit	Credit
Jan 02, 2017

Grecco declared and paid a cash dividend of $1.60 per share.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
Sep 01, 2017

Grecco announced that net income for the year is $488,400.

Date	General Journal	Debit	Credit
Dec 31, 2017

Grecco declared and paid a cash dividend of $2.20 per share.

Date	General Journal	Debit	Credit
Jun 01, 2018

Grecco announced that net income for the year is $702,900.

Date	General Journal	Debit	Credit
Dec 31, 2018

Kodax sold 8,000 shares of Grecco for $325,000 cash.

Date	General Journal	Debit	Credit
Dec 31, 2018

Solutions

Expert Solution


Journal entries
Date	Accounting titles & Explanations			Debit	Credit

2017
2-Jan	long term investment-Grecco			412100
	cash				412,100
	(409000+3,100)

1-Sep	Cash
	long term investment-Grecco			39936
	(24960*1.6)				39,936

31-Dec	long term investment-Grecco			126984
	Earnings from long term investment				126,984
	((488400/96000)*24960


2018	Cash			54912
	long term investment-Grecco				54,912
	(24960*2.2)

	long term investment-Grecco			182754
	Earnings from long term investment				182754
	((702900/96000)*24960


	Cash			325,000
	long term investment-grecco				200,958
	gain on sale of investment				124,042





	Record sale of investment
	original cost		412,100
	less 2017 dividends		39,936
	add 2017 earnings		126984
	less 2018 dividends		54912
	add 2018 earnings		182754
	book value at date of sale		626,990

	Book value of share sold 626990/24960*8000
		200958.3

ekkarill92 answered 8 months ago

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