Question

On March 31, 2021, Chow Brothers, Inc., bought 6% of KT Manufacturing’s capital stock for $51.8...

On March 31, 2021, Chow Brothers, Inc., bought 6% of KT Manufacturing’s capital stock for $51.8 million. KT’s net income for the year ended December 31, 2021, was $80.6 million. The fair value of the shares held by Chow was $36.2 million at December 31, 2021. KT did not declare or pay a dividend during 2021.

Required:
1. Prepare all appropriate journal entries related to the investment during 2021.
2. Assume that Chow sold the stock on January 20, 2022, for $30.6 million. Prepare the journal entries to record the sale.

1. journal entry worksheet

(a) March 31, 2021 - Record the purchase of KT Manufacturing’s capital stock for $51.8 million.

(b) December 31, 2021 - Record the entry for KT's net income.

(c) December 31, 2021 - Record the fair value adjustment.

2. Journal entry worksheet

(a) January 2, 2022 - Record the entry to adjust the fair value

(b) January 2, 2022 - Record the sale of stock on January 20, 2022 for $30.6 million.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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 March 31, 2021, Chow Brothers, Inc., bought 10% of KT Manufacturing’s capital stock for $50...
On March 31, 2021, Chow Brothers, Inc., bought 10% of KT Manufacturing’s capital stock for $50 million. KT’s net income for the year ended December 31, 2021, was $80 million. The fair value of the shares held by Chow was $35 million at December 31, 2021. KT did not declare or pay a dividend during 2021. Required: 1. Prepare all appropriate journal entries related to the investment during 2021. 2. Assume that Chow sold the stock on January 20, 2022,...
On March 31, 2018, Chow Brothers, Inc., bought 8% of KT Manufacturing’s capital stock for $50.3...
On March 31, 2018, Chow Brothers, Inc., bought 8% of KT Manufacturing’s capital stock for $50.3 million. KT’s net income for the year ended December 31, 2018, was $80.1 million. The fair value of the shares held by Chow was $35.2 million at December 31, 2018. KT did not declare or pay a dividend during 2018. Required: 1. Prepare all appropriate journal entries related to the investment during 2018. 2. Assume that Chow sold the stock on January 20, 2019...
On January 2, 2018, Sanborn Tobacco Inc. bought 5% of Jackson Industry’s capital stock for $96...
On January 2, 2018, Sanborn Tobacco Inc. bought 5% of Jackson Industry’s capital stock for $96 million. Jackson Industry’s net income for the year ended December 31, 2018, was $126 million. The fair value of the shares held by Sanborn was $110 million at December 31, 2018. During 2018, Jackson declared a dividend of $66 million. Required: 1. Prepare all appropriate journal entries related to the investment during 2018. 2. Assume that Sanborn sold the stock on January 2, 2019...
On January 2, 2021, Sanborn Tobacco Inc. bought 10% of Jackson Industry’s capital stock for $91...
On January 2, 2021, Sanborn Tobacco Inc. bought 10% of Jackson Industry’s capital stock for $91 million. Jackson Industry’s net income for the year ended December 31, 2021, was $121 million. The fair value of the shares held by Sanborn was $100 million at December 31, 2021. During 2021, Jackson declared a dividend of $61 million. Required: 1. Prepare all appropriate journal entries related to the investment during 2021. (If no entry is required for a transaction/event, select "No journal...
Pharoah Company sells equipment on March 31, 2021, for $33,740 cash. The equipment was purchased on...
Pharoah Company sells equipment on March 31, 2021, for $33,740 cash. The equipment was purchased on January 5, 2018, at a cost of $82,500, and had an estimated useful life of five years and a residual value of $2,600. Pharoah Company uses straight-line depreciation for equipment. Adjusting journal entries are made annually at the company’s year end, December 31. 1. Prepare the journal entry to update depreciation to March 31, 2021. 2. Prepare the journal entry to record the sale...
On January 2, 2018, Sanborn Tobacco Inc. bought 10% of Jackson Industry’s capital stock for $104...
On January 2, 2018, Sanborn Tobacco Inc. bought 10% of Jackson Industry’s capital stock for $104 million. Jackson Industry’s net income for the year ended December 31, 2018, was $134 million. The fair value of the shares held by Sanborn was $126 million at December 31, 2018. During 2018, Jackson declared a dividend of $74 million. Required: 1. Prepare all appropriate journal entries related to the investment during 2018. 2. Assume that Sanborn sold the stock on January 2, 2019...
Goff Corporation acquired stock of Spiegel, Inc., on March 1, 2016, at a cost of $500,000....
Goff Corporation acquired stock of Spiegel, Inc., on March 1, 2016, at a cost of $500,000. The stock had a fair value of $550,000 at December 31, 2016, $610,000 at December 31, 2017, and $590,000 at December 31, 2018. Goff sold the stock for $640,000 on July 1, 2019. Spiegel did not pay any dividends during the time Goff held the stock. When Goff acquired the stock, it classified the investment as available-for-sale. However, Goff transitioned to the new accounting...
Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January...
Walters Audio Visual Inc. offers an incentive stock option plan to its regional managers. On January 1, 2021, options were granted for 64 million $1 par common shares. The exercise price is the market price on the grant date—$6 per share. Options cannot be exercised prior to January 1, 2023, and expire December 31, 2027. The fair value of the 64 million options, estimated by an appropriate option pricing model, is $1 per option. Required: 1. Determine the total compensation...
On June 30, 2021, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing...
On June 30, 2021, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing note in exchange. The note requires payment of $40,000 on March 31, 2022. The fair value of the merchandise exchanged is $37,600. Esquire views the financing component of this contract as significant. Required: 1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), any December 31, 2021 interest accrual, and...
On June 30, 2021, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing...
On June 30, 2021, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing note in exchange. The note requires payment of $46,000 on March 31, 2022. The fair value of the merchandise exchanged is $41,860. Esquire views the financing component of this contract as significant. Required: 1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), any December 31, 2021 interest accrual, and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT