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c) On March 1, 20X7, JBJ Co. acquired 1,000 shares of Hoi Co. for $30,000. This...

c) On March 1, 20X7, JBJ Co. acquired 1,000 shares of Hoi Co. for $30,000. This investment represents a 15% interest in Hoi. JBJ has classified this investment as an FVTOCI. On November 30, 20X7, Hoi paid a $25,000 dividend to its shareholders. At February 28, 20X8, Hoi’s shares were valued at $40/share and Hoi reported net income of $150,000 for the year. On April 15, 20X8, JBJ sold the shares for $53,000. Both JBJ and Hoi have February 28th year-ends.

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Answer #1
Date Account titles and explanation Debit Credit
March 1, 20X7 Investment in Hoi $30,000
Cash $30,000
November 30, 20X7 Cash(15% * $25,000) $3,750
Dividend Income $3,750
February 28, 20X8 Investment in Hoi $10,000
OCI-Unrealized gain($40,000 - $30,000) $10,000
April 15, 20X8 Cash $53,000
Investment in Hoi $40,000
OCI-Gain on sale $13,000
April 15, 20X8 Accumulated OCI-Reclassification to retained earnings $23,000
Retained earnings-Gain on sale of FVTOCI Investments $23,000
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