Financial Accounting 13e Warren/Reeve/Duchac
PR 15-3A Stock investment transactions, equity method and available-for-sale securities
Daffitar Inc. produces and sells theater set designs and costumes. The company began operations on January 1, 2014. The following transactions relate to securities acquired by Daffitar Inc., which has a fiscal year ending on December 31.
2014
Feb. 1 Purchased 12,000 shares of Acuity Inc. as an available-for-sale security at $27 per share, including the brokerage commision
Mar. 18 Recieved a cash divided of $0.18 per share on Acuity Inc. stock
Sept 12 A cash dividend of $0.24 per share was received on the Acuity stock
28 Sold 1,000 shares of Acuity Inc. Stock at $21 per share, less a brokerage commision of $50.
Dec. 31 Acuity Inc is classified as an available-for-sale investment and is adjusted to a fair value of $33 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment.
2015
Jan. 23 Purchased an influential interest in Shouse Inc. for $376,000 by purchasing 70,000 shares directly rom the estate of the founder of Shouse Inc. There are 250,000 shares of Shouse Inc. stock outstanding.
Mar. 16 Received a cash dividend of $0.24 per share on Acuity Inc. Stock
Sept. 16 Received a cash dividend of $0.24 per share plus an extra dividend of $0.06 per share on Acuity Inc. Stock
Dec. 31 Received $30,100 of cash dividends on Shouse Inc. stock. Shouse Inc. reported net income of $190,000 in 2015. Daffitar Inc. uses the equity method of accounting for its investment in Shouse Inc.
31. Acuity Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $30 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the decrease in fair value from $33 to $30 per share.
Instructions
1. Journalize the entries to record these transactions
2. Prepare the investment-related asset and stockholders’ equity balance sheet presentation for Daffitar Inc. on December 31, 2015, assuming the Retained Earnings balance on December 331, 2015, is $465,000.
What Students Are Saying About Us
.......... Customer ID: 12*** | Rating: ⭐⭐⭐⭐⭐"Honestly, I was afraid to send my paper to you, but splendidwritings.com proved they are a trustworthy service. My essay was done in less than a day, and I received a brilliant piece. I didn’t even believe it was my essay at first 🙂 Great job, thank you!"
.......... Customer ID: 14***| Rating: ⭐⭐⭐⭐⭐
"The company has some nice prices and good content. I ordered a term paper here and got a very good one. I'll keep ordering from this website."
