Glaser Services acquired 30% of the outstanding common stock of Nickels Company
ID: 2344260 • Letter: G
Question
Glaser Services acquired 30% of the outstanding common stock of Nickels Company on January 1, 2008, by paying $800,000 for the 45,000 shares. Nickels declared and paid $0.30 per share cash dividends on March 15, June 15, September 15, and December 15, 2008. Nickels reported net income of $320,000 for the year. At December 31, 2008, the market price of Nickels common stock was $24 per share.Prepare the journal entries for Glaser Services for 2008 assuming Glaser cannot exercise significant influence over Nickels. (Use the cost method and assume that Nickels common stock should be classified as a trading security.)
Prepare the journal entries for Glaser Services for 2008 assuming Glaser cannot exercise significant influence over Nickels. (Use the cost method and assume that Nickels common stock should be classified as a trading security
Explanation / Answer
Jan. 1 Stock Investments 800,000
Cash................................................................. 800,000
Mar. 15 Cash 13,500
Dividend Revenue
(45,000 X $.30)................................................ 13,500
June 15 Cash 13,500
Dividend Revenue.......................................... 13,500
Sept. 15 Cash 13,500
Dividend Revenue.......................................... 13,500
Dec. 15 Cash 13,500
Dividend Revenue.......................................... 13,500
31 Market Adjustment—Trading................................ 280,000
Unrealized Gain—Income
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