Question

4. On January 2, 2016, Danner Corp. purchased 32,000 shares (40%) of the common stock of...

4. On January 2, 2016, Danner Corp. purchased 32,000 shares (40%) of the common stock of Poe & Company. The purchase price was $320,000. Danner has significant influence over Poe. No amortization is required. During 2016, Poe reported income of $126,000 and paid dividends of $30,000. On January 2, 2017, Danner sold 4,000 shares for $51,500.

Required:

a. Compute the balance in Equity Investment at December 31, 2016.

b. Prepare the journal entry to record the sale of the 4,000 shares.

c.    What was the balance in Equity Investment after the shares were sold

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

a) Balance in Equity investment at December 31,2016

Initial investment 320000
Add: Net income (126000*40%) 50400
Less: Dividend (30000*40%) -12000
Equity investment at December 31,2016 358400

b) Journal entry

Date account and explanation Debit credit
Cash 51500
Gain on sale of investment 6700
Investment in Stock (358400/32000*4000) 44800
(To record sale of shares)

c) Balance in Equity investment after the shares were sold = 358400*28000/32000 = 313600

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 2, 2016, Danner Corp. purchased 32,000 shares (40%) of the common stock of Poe...
On January 2, 2016, Danner Corp. purchased 32,000 shares (40%) of the common stock of Poe & Company. The purchase price was $320,000. Danner has significant influence over Poe. No amortization is required. During 2016, Poe reported income of $126,000 and paid dividends of $30,000. On January 2, 2017, Danner sold 4,000 shares for $51,500. Required: Compute the balance in Equity Investment at December 31, 2016. Prepare the journal entry to record the sale of the 4,000 shares. What was...
Part A On January 2, 2017, Kesha Company purchased 10,000 shares of the stock of Petty...
Part A On January 2, 2017, Kesha Company purchased 10,000 shares of the stock of Petty Corp., and did not obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $5 per share, and represents a 10% ownership stake. Petty Corp made $20,000 of net income in 2017, and paid dividends of $5,000 on December 15, 2017. On December 31, 2017, Petty Corp's stock was trading on the open market for $8 per share...
On January 1, 2017, Fisher Corporation purchased 40 percent (80,000 shares) of the common stock of...
On January 1, 2017, Fisher Corporation purchased 40 percent (80,000 shares) of the common stock of Bowden, Inc. for $976,000 in cash and began to use the equity method for the investment. The price paid represented a $60,000 payment in excess of the book value of Fisher's share of Bowden's underlying net assets. Fisher was willing to make this extra payment because of a recently developed patent held by Bowden with a 15-year remaining life. All other assets were considered...
Yes Men, Inc. purchased 10,000 common shares of No Men Corp. common stock at $10 per...
Yes Men, Inc. purchased 10,000 common shares of No Men Corp. common stock at $10 per share on January 1, 2017 with cash. The security pays a $2.00 per share cash dividend at the end of each year. At December 31, 2017, the shares had a fair value of $12 per share and at the end of 2018 the shares had a fair value of $8 per share. Required: 1. Prepare the journal entries to record the purchase of the...
2016 Jan. 15 Purchased 15,000 shares of Park, Inc.’s common stock at $10 per share plus...
2016 Jan. 15 Purchased 15,000 shares of Park, Inc.’s common stock at $10 per share plus a brokerage commission of $1,000. These shares represent a 25 percent ownership of the Park common stock. Dec. 31 Received a cash dividend of $2.80 per share of common stock from Park. Dec. 31 Made the adjusting entry to reflect income from the Park stock investment. Park’s 2016 net income is $124,000. 2017 Jan. 20 Sold all 15,000 shares of the Park common stock...
1)On January 1, 2017, Padme Corp. acquired 80% of the voting common stock of Stormtrooper Inc....
1)On January 1, 2017, Padme Corp. acquired 80% of the voting common stock of Stormtrooper Inc. During the year, Padme sold to Stormtrooper for $450,000 goods which cost $330,000. Stormtrooper still owned 15% of the goods at year-end. Stormtrooper's reported net income was $204,000, and Padme's net income was $806,000. Padme decided to use the equity method to account for this investment. What was the noncontrolling interest's share of consolidated net income? A. $3,600. B. $22,800. C. $30,900. D. $32,900....
1,400,000 shares of no-par common stock were authorized; 327,000 shares were issued on January 1, 2016,...
1,400,000 shares of no-par common stock were authorized; 327,000 shares were issued on January 1, 2016, at $30 per share. 426,000 shares of $90 par value, 10.00% cumulative, preferred stock were authorized, and 130,000 shares were issued on January 1, 2016, at $133 per share. Net income for the years ended December 31, 2016, 2017, and 2018, was $4,680,000, $7,040,000, and $9,160,000, respectively. No dividends were declared or paid during 2016 or 2017. However, on December 17, 2018, the board...
2016 Jan. 15 Purchased 12,000 shares of Van, Inc.’s common stock at $11 per share plus...
2016 Jan. 15 Purchased 12,000 shares of Van, Inc.’s common stock at $11 per share plus a brokerage commission of $900. These shares represent a 30 percent ownership of Van’s common stock. Dec. 31 Received a cash dividend of $3.25 per share of common stock from Van. Dec. 31 Made the adjusting entry to reflect income from the Van stock investment. Van’s 2016 net income is $86,000. 2017 Jan. 20 Sold all 12,000 shares of the Van common stock for...
ON JANUARY 2, 2020, RAMS CORP. ACQUIRED 30% OF THE OUTSTANDING COMMON STOCK OF COLTS CO....
ON JANUARY 2, 2020, RAMS CORP. ACQUIRED 30% OF THE OUTSTANDING COMMON STOCK OF COLTS CO. FOR $2,000,000. THIS ACQUISITION GAVE THE RAMS THE ABILITY TO EXERCISE SIGNIFICANT INFLUENCE OVER THE INVESTEE. THE 100% BOOK VALUE OF THE ACQUIRED SHARES WAS $4,500,000. ANY EXCESS COST OVER THE UNDERLYING BOOK VALUE WAS ASSIGNED TO A PATENT THAT WAS UNDERVALUED ON THE COLT'S BALANCE SHEET. THIS PATENT HAS A REMAINING USEFUL LIFE OF TEN YEARS. FOR THE YEAR ENDED DECEMBER 31, 2020,...
Swifty Corp. was a 30% owner of Nash Company, holding 216,000 shares of Nash’s common stock...
Swifty Corp. was a 30% owner of Nash Company, holding 216,000 shares of Nash’s common stock on December 31, 2016. The investment account had the following entries. Investment in Nash 1/1/15 Cost 3,050,000 12/6/15 Dividend Received 150,000 12/31/15 Share of income 400,000 12/5/16 240,000 12/31/16 Share of income 500,000 On January 2, 2017, Swifty sold 108,000 shares of Nash for $3,360,000, thereby losing its significant influence. During the year 2017, Nash experienced the following results of operations and paid the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT