Heidebrecht Design acquired 30% of the outstanding common stock of Quayle Compan

Question

Heidebrecht Design acquired 30% of the outstanding common stock of Quayle Company on January 1, 2014, by paying $697,600 for the 43,600 shares. Quayle declared and paid $0.30 per share cash dividends on March 15, June 15, September 15, and December 15, 2014. Quayle reported net income of $324,400 for the year. At December 31, 2014, the market price of Quayle common stock was $26 per share. Collapse question part (a) Prepare the journal entries for Heidebrecht Design for 2014 assuming Heidebrecht Design cannot exercise significant influence over Quayle. (Use the cost method and assume that Quayle common stock should be classified as a trading security.)

Explanation / Answer

Heiderbrecht Design Details Amt $ Trading security puchase value                   697,600 No Of security purchased                     43,600 Price / Security                       16.00 dividend per share qtrly                          0.30 Total Qtrly dividend amount                     13,080 Fair value /share on Dec 31.2014.                             26 Unrealized gain /share                             10 Total Unrealized Gain Dec31.2014.                   436,000 Journal Entry Date Account Dr $ Cr $ Mar 15.2014. Cash                     13,080 Dividend Income                   13,080 Jun 15.2014. Cash                     13,080 Dividend Income                   13,080 Sep 15.2014. Cash                     13,080 Dividend Income                   13,080 Dec. 15.2014. Cash                     13,080 Dividend Income                   13,080 Dec. 31..2014. Investment in Quayle Company                   436,000 Unrealized Gain (P/L a/c)                436,000 ( recording unrelized gain based on FMV)

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.