The following information applies to the questions displayed below. Selk Steel C
ID: 2427910 • Letter: T
Question
The following information applies to the questions displayed below. Selk Steel Co., which began operations on January 4, 2013, had the following subsequent transactions and events in its long-term investments. 2013 Jan. 5 Selk purchased 50,000 shares (25% of total) of Kildare's common stock for $1,100,000. Oct. 23 Kildaire declared and paid a cash dividend of $6.00 per share. Dec. 31 Kildaire's net income for 2013 is $1,334,000, and the fair value of its stock at December 31 is $31.70 per share. 2014 Oct. 15 Kildaire declared and paid a cash dividend of $3.80 per share. Dec. 31 Kildaire's net income for 2014 is $1,646,000, and the fair value of its stock at December 31 is $33.70 per share. 2015 Jan. 2 Selk sold all of its investment in Kildaire for $1,525,000 cash.Explanation / Answer
2013 jan 5 investment in kildaire share debit 275000
cash credit 275000
oct 23 cash debit 300000
dividend credit 300000
oct 2014 cash debit 190000
credit dividend 190000
jan 2015 - cash debit 1525000
credit investment in kildaire share 530000
credit orifit on sale of investment 995000
per share value at jan 1 2015
value at the end = 530000/50000 = 10.6
increase in selks equity = 2013 = 275000+333500 - 300000 = 308500
2014 = 308500+ 411500 - 190000 = 530000
net increase = 530000 - 275000 = 255000
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