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In: Accounting
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.
|
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 | |||||||
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