Question

. The Janjua Company had the following account balances at 1/1/16: Common Stock $50,000 Treasury Stock...

. The Janjua Company had the following account balances at 1/1/16:

Common Stock $50,000

Treasury Stock (at cost) 12,000

Paid-in-Capital in Excess of Par 200,000

Investments in AFS Equity Securities 37,000

FVA (AFS) 2,500 credit

Retained Earnings 35,000

On that date, the Accumulated OCI account was at its proper balance. There were no sales or purchases of Common Stock or Investments during 2016. Prior to any adjusting journal entries related to the investments, 2016 Net Income was $7,800. No other transactions affecting Retained Earnings occurred. Fair Value of the Investments at 12/31/2016 was $34,700.

Required:

(a) Prepare the 12/31/16 journal entry to adjust the investment to fair value.

(b) Prepare the complete 12/31/16 Equity section of the balance sheet.

Homework Answers

Answer #1

Solution:-

(a) Prepare the 12/31/16 journal entry to adjust the investment to fair value.

Date Particulars Debit Credit
12/31/16 FVA (AFS)

= $34,700 - $37,000 - $2,500

= $4,800

Unrealized gain on AFS securities $4,800

(b) Prepare the complete 12/31/16 Equity section of the balance sheet.

Particulars Amount
Stockholder equity :-
Common stock $50,000
Paid in capital in excess of par $200,000
Total paid incapital

= 50,000 + 200,000

= $250,000

Retained earnings

= $35,000 + $7,800

= $42,800

Accumulated other comprehensive income

= 4,800 - 2,500

= $2,300

Treasury stock ( at cost ) $12,000
Stockholder equity ending balance

= [ $250,000 + $42,800 + $2,300 ] - $12,000

= 295,100 - 12,000

= $ 283,100

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
The Janjua Company had the following account balances at 1/1/18: Common Stock $90,000 Treasury Stock (at...
The Janjua Company had the following account balances at 1/1/18: Common Stock $90,000 Treasury Stock (at cost) $12,000 Paid-in-Capital in Excess of Par $60,000 Investments in Trading Debt Securities $30,000 FVA (Trading) $2,000 debit Retained Earnings $14,000 There were no sales or purchases of Common Stock or Investments during 2018. Prior to any adjusting journal entries related to the Investments, 2018 Net Income was $8,600. No other transactions affecting Retained Earnings occurred. Fair Value of the Investments at 12/31/18 was...
On January 1, 2018, Walker Corporation had the following account balances: Common stock, $1 par, 250,000...
On January 1, 2018, Walker Corporation had the following account balances: Common stock, $1 par, 250,000 shares issues 250,000 Paid-in-capital - excess of par, common 500,000 Preferred stock, $100 par, 10,000 shares outstanding 1,000,000 Paid-in-capital - excess of par, preferred 100,000 Retained Earnings 2,000,000 Treasury stock, at cost, 5,000 shares 25,000 During 2018, the following transactions occurred relating to common stock: 1/15/18 - Declared a property dividend of 100,000 shares of Wagner Company (book value $10 per share; fair value...
On November 30, 2016, Davis Company had the following account balances: Debit Credit Cash $3,090 Accounts...
On November 30, 2016, Davis Company had the following account balances: Debit Credit Cash $3,090 Accounts Receivable 9,900 Allowance for Doubtful Accounts $100 Inventory 17,750 Supplies 1,400 Land 9,000 Buildings and Equipment 42,000 Accumulated Depreciation 4,200 Accounts Payable 10,700 Common Stock 20,000 Retained Earnings (1/1/2016) 42,400 Dividends 2,000 Sales Revenue 69,700 Cost of Goods Sold 36,860 Salaries Expense 12,500 Advertising Expense 8,100 Other Expenses 4,500 During the month of December, Davis entered into the following transactions: Date Transaction Dec. 4...
Hammock Inc. acquired all of the common stock that was outstanding of Iceberg Company on 1/1/16....
Hammock Inc. acquired all of the common stock that was outstanding of Iceberg Company on 1/1/16. As a result of this acquisition, there will be annual amortization in the amount of $55,000. Hammock reported a retained earnings balance of $510,000 and Iceberg reported a retained earnings balance of $145,000 on the date of acquisition. In addition, Hammock had net income for 2016 in the amount of $95,000 and net income for 2017 in the amount of $105,000. Hammock also paid...
On January 1, 2018, Fascom had the following account balances in its shareholders' equity accounts. Common...
On January 1, 2018, Fascom had the following account balances in its shareholders' equity accounts. Common stock, $1 par, 250,000 shares issued 250,000 Paid-in capital—excess of par, common 500,000 Paid-in capital—excess of par, preferred 100,000 Preferred stock, $100 par, 10,000 shares outstanding 1,000,000 Retained earnings 2,000,000 Treasury stock, at cost, 5,000 shares 25,000 During 2018, Fascom Inc. had several transactions relating to common stock. 1. January 15: Declared a property dividend of 100,000 shares of Slowdown Company (book value $10...
Common stock $1 Par Add. Paid in Cap Retained Earnings Treasury Stock Total Share- Holders Equity...
Common stock $1 Par Add. Paid in Cap Retained Earnings Treasury Stock Total Share- Holders Equity Bal. 1/1/2015 354,000 10,415,000 2,761,044 - 13,530,044 Common Shares 370,000 12,210,000 Shares Repurchase (83,500 shares) (1,670,000) Cash Dividends (50,000) Net Income 2,696,789 Bal. 12/31/2015 724,000 22,625,000 5,407,833 (1,670,000) 27,086,833 Cash Dividend Comm Stock (75,000) Stock div 5 for 4 181,000 (181,000) Net Income 3,805,617 Bal. 12/31/216 905,000 22,625,000 8,957,450 (1,670,000) 31,817,450 Requirement 1: Use Journal Entries to establish beginning balances for each of the...
P12-3A Journalize transactions and adjusting entry for stock investments. On December 31, 2015, Turnball Associates owned...
P12-3A Journalize transactions and adjusting entry for stock investments. On December 31, 2015, Turnball Associates owned the following securities, held as a long-term investment. The securities are not held for influence or control of the investee. Common Stock Shares Cost Gehring Co. 2,000 $60,000 Wooderson Co. 5,000 45,000 Kitselton Co. 1,500 30,000 On December 31, 2015, the total fair value of the securities was equal to its cost. In 2016, the following transactions occurred. July 1 Received $1 per share...
At the beginning of 2009, Presidio Company purchased 95% of the common stock of Succo Company...
At the beginning of 2009, Presidio Company purchased 95% of the common stock of Succo Company for $533,615. On that date, Succo Company’s stockholders’ equity consisted of the following: Common stock $323,500 Other contributed capital 107,200 Retained earnings 131,000    Total $561,700 During 2017, Succo Company reported net income of $43,400 and distributed dividends in the amount of $18,300. Succo Company’s retained earnings balance at the end of 2016 amounted to $158,500. Presidio Company uses the equity method. Prepare in general...
The shareholders' equity accounts of Grouper Inc. have the following balances on December 31, 2020: Common...
The shareholders' equity accounts of Grouper Inc. have the following balances on December 31, 2020: Common shares, 420,000 shares issued and outstanding $ 9,240,000 Contributed surplus 500,000 Retained earnings 42,600,000 Common shares are currently trading on the Toronto Stock Exchange at $51. 1. A stock dividend of 15% is declared and issued at the fair value of the shares. Prepare the appropriate journal entries. Account Titles and Explanation Debit Credit (To record declaration of stock dividend) (To record distribution of...
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