The beginning balance sheet of PageSource Co. included a $ 750,000 investment in
ID: 2400441 • Letter: T
Question
The beginning balance sheet of PageSource Co. included a $ 750,000 investment in Andy stock (40?% ownership, Page has significant influence over Andy?). During the? year, Page Source completed the following investment? transactions:
Mar.
3
Purchased 3,000 shares at $12 per share of Josh
Software common stock as a?long-term equity? investment, representing 4% ownership, no significant influence.
May
15
Dec.
15
Dec
31
31
31
Andy?'s stock fair value at? year-end was $749,000.
Dec
31
Josh?'s common stock fair value at? year-end was $13s per share.
1.
2.
3.
4.
Mar.
3
Purchased 3,000 shares at $12 per share of Josh
Software common stock as a?long-term equity? investment, representing 4% ownership, no significant influence.
May
15
Received a cash dividend of $0.58 per share on the Josh investment.Dec.
15
Received a cash dividend of $45,000from Andy investment.
Dec
31
Received Andy?'sannual report showing $110,000 of net income. Dec
31
Received Josh?'s annual report showing $200,000 of net income for the year. Dec31
Andy?'s stock fair value at? year-end was $749,000.
Dec
31
Josh?'s common stock fair value at? year-end was $13s per share.
1.
Journalize the transactions for the year of Water Source.2.
Post transactions to? T-accounts to determine the December? 31,2018?, balances related to the investment and investment income accounts.3.
Prepare Water ?Source's partial balance sheet at December? 31, 2018?, from your answers in Requirement 2.4.
Where is the unrealized holding gain or loss associated with th John stock? reported?Explanation / Answer
Opening Investment 750000 40% ownership Journal Entry 3-Mar Availabe for Sale Investment 36000 To Cash 36000 (3000*12) 15-May Cash 1740 To Dividend Income 1740 (3000*0.58) 15-Dec Cash 45000 To Investment in Andy's stock 45000 31-Dec Investment in Andy's stock 80000 To Income in Andy's 80000 (200000*40%) 31-Dec Fair value adjustment in Andy's stock 36000 To Investment in Andy's Stock 36000 31-Dec Fair Value adjustment in Available for Sale 3000 To Available for Sale Investment 3000 (13-12)*3000 T-Accounts Investment in Andy Stock Opening balance 750000 Cash 45000 Income in Andy's stock 80000 Fair Value Adjustment in Andy's stock 36000 Closing Balance 794000 830000 830000 Cash Account Dividend Income 1740 Available for Sale Investment 36000 Investment in Andy's stock 45000 Closing Balance 10740 46740 46740 Available for Sale Investment Cash 45000 Fair Value adjustment in Available for Sale 3000 Closing Balance 42000 45000 45000 Balance Sheet(Partial) as on 31st Dec Liabilities and Share capital Amount ($) Assets Amount ($) Dividend Income 1740 Cash 10740 Fair Value Adjustment in Andy's stock -36000 Equity Investment : Investment in Andy's stock 794000 Available for Sale Investment Josh Software 42000 Fair Value adjustment in available for Sale Investment 3000
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