Question

On January 2, 2018, Alpaca Company purchased 14,000 shares of the stock of Zebra Company, and...

On January 2, 2018, Alpaca Company purchased 14,000 shares of the stock of Zebra Company, and did not obtain significant influence.  The investment is intended as a long-term investment.  The stock was purchased for $12 per share, and represents a 10% ownership stake.  Zebra Company made $55,000 of net income in 2018, and paid dividends of 50 cents per share on December 15, 2018.  On December 31, 2018, Zebra Company's stock was trading on the open market for $15 per share at the end of the year.  Use this information to prepare the General Journal entry(ies) (without explanation) for January 2 purchase and the December 15 & 31, 2018 record of income & gain/loss. If no entry is required then write "No Entry Required."

Homework Answers

Answer #1

Solution:

Journal Entries - Alpaca Company
Date Particulars Debit Credit
2-Jan Investment in Zebra Company Dr $168,000.00
         To Cash $168,000.00
(To record investment in Zebra company)
15-Dec Cash Dr $7,000.00
         To Dividend revenue $7,000.00
(To record dividend received)
31-Dec Fair value adjustment Dr $42,000.00
         To Unrealized holding gain or loss - OCI $42,000.00
(To record adjustment to fair value)
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
How would i solve this On January 2, 2018, Alpaca Company purchased 14,000 shares of the...
How would i solve this On January 2, 2018, Alpaca Company purchased 14,000 shares of the stock of Zebra Company, and did not obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $12 per share, and represents a 10% ownership stake. Zebra Company made $55,000 of net income in 2018, and paid dividends of 50 cents per share on December 15, 2018. On December 31, 2018, Zebra Company's stock was trading on the...
On January 2, 2018, RF Company purchased 14,000 shares of the stock of Zebra Company, and...
On January 2, 2018, RF Company purchased 14,000 shares of the stock of Zebra Company, and did not obtain significant influence.  The investment is intended as a long-term investment.  The stock was purchased for $12 per share, and represents a 10% ownership stake. Zebra Company made $55,000 of net income in 2018, and paid dividends of 50 cents per share on December 15, 2018.  On December 31, 2018, Zebra Company's stock was trading on the open market for $15 per share at the...
On January 2, 2018, Baltimore Company purchased 14,000 shares of the stock of Towson Company at...
On January 2, 2018, Baltimore Company purchased 14,000 shares of the stock of Towson Company at $13 per share. Baltimore obtained significant influence as the purchase represents a 30% ownership stake in Towson Company. On August 1, 2018, Towson Company paid cash dividends of $23,000. Baltimore Company intended this investment to a long-term investment. On December 31, 2018, Towson Company reported $70,000 of net income for FY 2018. Additionally, the current market price for Towson Company's stock increased to $25...
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 2, 2018, All Good Company purchased 5,000 shares of the stock of Big Bad...
On January 2, 2018, All Good Company purchased 5,000 shares of the stock of Big Bad Company, and DID NOT obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $10 per share, and represents a 10% ownership stake. Big Bad Company made $250,000 of net income in 2018, and paid dividends to All Good Company of $12,500 on December 15, 2017. On December 31, 2017, Big Bad Company's stock was trading on the...
On January 2, 2018, All Good Company purchased 5,000 shares of the stock of Big Bad...
On January 2, 2018, All Good Company purchased 5,000 shares of the stock of Big Bad Company, and DID obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $12 per share, and represents a 30% ownership stake. Big Bad Company made $450,000 of net income in 2018, and paid dividends to All Good Company of $20,000 on December 15, 2018. Big Bad Company's stock was trading on the open market for $17 per...
On January 2, 2018, All Good Company purchased 10,000 shares of the stock of Big Bad...
On January 2, 2018, All Good Company purchased 10,000 shares of the stock of Big Bad Company, and DID obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $12 per share, and represents a 30% ownership stake. Big Bad Company made $500,000 of net income in 2018, and paid dividends to All Good Company of $25,000 on December 15, 2018. Big Bad Company's stock was trading on the open market for $21 per...
On January 2, 2018, Baltimore Company purchased 9,000 shares of the stock of Towson Company at...
On January 2, 2018, Baltimore Company purchased 9,000 shares of the stock of Towson Company at $15 per share. Baltimore did NOT obtain significant influence as the purchase represents a 5% ownership stake in Towson Company. On August 1, 2018, Towson Company paid cash dividends of $19,000. Baltimore Company intended this investment to a long-term investment. On December 31, 2018, Towson Company reported $65,000 of net income for FY 2018. Additionally, the current market price for Towson Company's stock increased...
How would i solve this? On January 2, 2019, All Good Company purchased 14,000 shares of...
How would i solve this? On January 2, 2019, All Good Company purchased 14,000 shares of the stock of Big Bad Company, and DID NOT obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $13 per share, and represents a 10% ownership stake. Big Bad Company made $350,000 of net income in 2019, and paid dividends to All Good Company of $10,000 on December 15, 2019. On December 31, 2019, Big Bad Company's...
On January 2, 2018, Baltimore Company purchased 10,000 shares of the stock of Towson Company at...
On January 2, 2018, Baltimore Company purchased 10,000 shares of the stock of Towson Company at $14 per share. Baltimore obtained significant influence as the purchase represents a 30% ownership stake in Towson Company. On August 1, 2018, Towson Company paid cash dividends of $17,000. Baltimore Company intended this investment to a long-term investment. On December 31, 2018, Towson Company reported $60,000 of net income for FY 2018. Additionally, the current market price for Towson Company's stock increased to $25...