Question

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 entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

Record the purchase of Jackson Industry capital stock for $91 million.

Record Sanborn Tobacco's portion of Jackson Industry's net income of $121 million.

Record the dividend revenue.

Record the fair value adjustment.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Journal entries related to the investment during 2021:

amount in millions

Particulars Debit ($) Credit ($)
Investment in jackson 91
To cash 91
(Recording the purchase of Jackson Industry capital stock )
No journal entry required
(Recording Sanborn Tobacco's portion of Jackson Industry's net income of $121 million)
cash a/c 6.1
To Investment Revenue 6.1
(Recording the dividend revenue) 61 * 10%share
Fairvalue Adjustment a/c 9
To Unrealisied gain or loss - OCI 9
(Recording the fair value adjustment $100-$91)
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, 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, 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...
Exercise 12-16 (Static) Equity investments; fair value through net income [LO12-5] [The following information applies to...
Exercise 12-16 (Static) Equity investments; fair value through net income [LO12-5] [The following information applies to the questions displayed below.] On January 2, 2021, Sanborn Tobacco Inc. bought 5% of Jackson Industry’s capital stock for $90 million. Jackson Industry’s net income for the year ended December 31, 2021, was $120 million. The fair value of the shares held by Sanborn was $98 million at December 31, 2021. During 2021, Jackson declared a dividend of $60 million. Exercise 12-16 (Static) Part...
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,...
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 4, 2021, Runyan Bakery paid $326 million for 10 million shares of Lavery Labeling...
On January 4, 2021, Runyan Bakery paid $326 million for 10 million shares of Lavery Labeling Company common stock. The investment represents a 30% interest in the net assets of Lavery and gave Runyan the ability to exercise significant influence over Lavery's operations. Runyan received dividends of $3.50 per share on December 15, 2021, and Lavery reported net income of $160 million for the year ended December 31, 2021. The market value of Lavery's common stock at December 31, 2021,...
Colah Company purchased $1,800,000 of Jackson, Inc., 8% bonds at par on July 1, 2021, with...
Colah Company purchased $1,800,000 of Jackson, Inc., 8% bonds at par on July 1, 2021, with interest paid semi-annually. Colah determined that it should account for the bonds as an available-for-sale investment. At December 31, 2021, the Jackson bonds had a fair value of $2,080,000. Colah sold the Jackson bonds on July 1, 2022 for $1,620,000. Required: 1. Prepare Colah’s journal entries for the following transactions: The purchase of the Jackson bonds on July 1. Interest revenue for the last...
On January 1, 2021, Tru Fashions Corporation awarded restricted stock units (RSUs) representing 14 million of...
On January 1, 2021, Tru Fashions Corporation awarded restricted stock units (RSUs) representing 14 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. On the grant date, the shares had a market price of $6.30 per share. Required: 1. Determine the total compensation cost pertaining to the RSUs. 2. Prepare the appropriate journal...
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT