Question

On January 1, 2018, Ball Corporation purchased shares of Leftwich Company common stock. a. Assume that...

On January 1, 2018, Ball Corporation purchased shares of Leftwich Company common stock.

a. Assume that the stock acquired by Ball represents 15% of Leftwich’s voting stock and that Ball has

no influence over Leftwich’s business decisions. Use the financial statement effects template (with

amounts and accounts) to record the following transactions.

1. Ball purchased 5,000 common shares of Leftwich at $15 cash per share.

2. Leftwich reported annual net income of $40,000.

3. Ball received a cash dividend of $1.10 per common share from Leftwich.

4. Year-end market price of Leftwich common stock is $19 per share.

b. Assume that the stock acquired by Ball represents 30% of Leftwich’s voting stock and that Ball accounts

for this investment using the equity method because it is able to exert significant influence. Use the

financial statement effects template (with amounts and accounts) to record the following transactions.

1. Ball purchased 5,000 common shares of Leftwich at $15 cash per share.

2. Leftwich reported annual net income of $40,000.

3. Ball received a cash dividend of $1.10 per common share from Leftwich.

4. Year-end market price of Leftwich common stock is $19 per share

Note: Please use the financial statement effects template listing out the different transactions

Homework Answers

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
On January 1, All About Company had 60,000 shares of no-par common stock issued and outstanding....
On January 1, All About Company had 60,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $4 per share. During the year, the following transactions occurred. Apr. 1 Issued 9,000 additional shares of common stock for $11 per share. June 15 Declared a cash dividend of $1.50 per share to stockholders of record on June 30. July 10 Paid the $1.50 cash dividend. Dec. 1 Issued 4,000 additional shares of common stock for...
On January 1, Guillen Corporation had 95,000 shares of no-par common stock issued and outstanding. The...
On January 1, Guillen Corporation had 95,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $5 per share. During the year, the following occurred. Apr. 1 Issued 25,000 additional shares of common stock for $17 per share. June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30. July 10 Paid the $1 cash dividend. Dec. 1 Issued 2,000 additional shares of common stock for $19 per...
On January 1, Flounder Corp. had 61,500 shares of no-par common stock issued and outstanding. The...
On January 1, Flounder Corp. had 61,500 shares of no-par common stock issued and outstanding. The stock has a stated value of $4 per share. During the year, the following transactions occurred. Apr. 1 Issued 11,700 additional shares of common stock for $12 per share. June 15 Declared a cash dividend of $1.90 per share to stockholders of record on June 30. July 10 Paid the $1.90 cash dividend. Dec. 1 Issued 5,200 additional shares of common stock for $13...
On January 1, Guillen Corporation had 95,000 shares of no-par common stock issued and outstanding. The...
On January 1, Guillen Corporation had 95,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $5 per share. During the year, the following occurred. Apr. 1 Issued 25,000 additional shares of common stock for $17 per share. June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30. July 10 Paid the $1 cash dividend. Dec. 1 Issued 2,000 additional shares of common stock for $19 per...
On January 1, Blossom Corporation had 93,000 shares of no-par common stock issued and outstanding. The...
On January 1, Blossom Corporation had 93,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $7 per share. During the year, the following occurred. Apr. 1 Issued 30,000 additional shares of common stock for $16 per share. June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30. July 10 Paid the $1 cash dividend. Dec. 1 Issued 1,500 additional shares of common stock for $19 per...
On January 1, Pharoah Corporation had 97,500 shares of no-par common stock issued and outstanding. The...
On January 1, Pharoah Corporation had 97,500 shares of no-par common stock issued and outstanding. The stock has a stated value of $6 per share. During the year, the following occurred. Apr. 1 Issued 23,000 additional shares of common stock for $17 per share. June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30. July 10 Paid the $1 cash dividend. Dec. 1 Issued 1,500 additional shares of common stock for $19 per...
Draft Co. purchased 14,000 shares of Hamburg Corporation's 40,000 shares of common stock on January 1....
Draft Co. purchased 14,000 shares of Hamburg Corporation's 40,000 shares of common stock on January 1. This represented 35% of Hamburg's outstanding shares and gave Draft Co. significant influence over Hamburg's management and operations. On October 11, Hamburg declared and paid cash dividends of $30,000. On December 31, Hamburg reported net income of $125,000 for the year. Prepare the journal entries Draft Co. should record to account for the dividends received and the earnings reported by Hamburg Corporation.
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...
Hart Corporation purchased 350,000 shares of the outstanding common voting stock of Gotti Corporation on January...
Hart Corporation purchased 350,000 shares of the outstanding common voting stock of Gotti Corporation on January 2, 2021, at a cash cost of $8.00 per share as a short-term investment. At the date of purchase Gotti Corporation had outstanding 1,000,000 shares of common stock (par $1). At year end, December 31, 2021, Gotti reported net income of $200,000 and declared and paid a $50,000 cash dividend. The December 31, 2021, the market value of Gotti's stock was $7.50. Give the...
Hart Corporation purchased 350,000 shares of the outstanding common voting stock of Gotti Corporation on January...
Hart Corporation purchased 350,000 shares of the outstanding common voting stock of Gotti Corporation on January 2, 2021, at a cash cost of $8.00 per share as a short-term investment. At the date of purchase Gotti Corporation had outstanding 1,000,000 shares of common stock (par $1). At year end, December 31, 2021, Gotti reported net income of $200,000 and declared and paid a $50,000 cash dividend. The December 31, 2021, the market value of Gotti's stock was $7.50. Give the...