Forte Inc. produces and sells theater set designs and costumes. The company bega
ID: 2478495 • Letter: F
Question
Forte Inc. produces and sells theater set designs and costumes. The company began operations on January 1, 2016. The following transactions relate to securities acquired by Forte Inc., which has a fiscal year ending on December 31:
Record these transactions on page 10:
Record these transactions on page 11:
2016 Jan. 22 Purchased 23,200 shares of Sankal Inc. as an available-for-sale security at $18 per share, including the brokerage commission. Mar. 8 Received a cash dividend of $0.21 per share on Sankal Inc. stock. Sep. 8 A cash dividend of $0.25 per share was received on the Sankal stock. Oct. 17 Sold 3,000 shares of Sankal Inc. stock at $15 per share, less a brokerage commission of $90. Dec. 31 Sankal Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $27 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment.Explanation / Answer
Forte Inc. Journal Entries Date Account Title Dr $ Cr $ Jan 22. 2016. Investment in Available for Sale Security-Sankal Inc 417,600 Cash 417,600 ( purchase of 23200 share of Sankal) Mar 8. 2016. Dividend Income 4,872 Cash 4,872 ( dividend receipt -Sankal shares @$0.21) Sep 8. 2016. Dividend Income 5,800 Cash 5,800 ( dividend receipt -Sankal shares @$0.25) Oct 17. 2016. Investment in Available for Sale Security-Sankal Inc 54,000 Cash 44,910 Loss on Sale of Investment 9,090 ( sale of 3000 Sankal shares @$15less $90 brokerage) Dec31. 2016. Valuation Allowance -Available for Sale Security 181,800 Unrealized Holding Gain/(loss) in Available for Sale Security -OCI 181,800 (Fair value adjustement $27 for Sankal shares) Jan 10.2017. Investment in Imboden Inc. 1,029,600 Cash 1,029,600 ( 33% Equity Investment in Imboden) Mar 10.2017. Dividend Income 6,262 Cash 6,262 ( dividend receipt -Sankal shares @$0.31) Sep 12.2017. Dividend Income 6,060 Cash 6,060 ( dividend receipt -Sankal shares @$0.30) Dec31.2017. Valuation Allowance -Available for Sale Security 101,000 Unrealized Holding Gain/(loss) in Available for Sale Security -OCI 101,000 (Fair value adjustement $22 for Sankal shares) Dec31.2017. Investment in Imboden Inc. 137,907 Equity income from Imboden Inc 137,907 (recording 33% share of Imboden Income) Cash 67,300 Investment in Imboden Inc. 67,300 ( dividend receipt) Forte Inc. Balance Sheet (Partial) As on Dec 31.2017. Details Amt $ Assets Investment in Available for Sale Security-Sankal Inc 363,600 Valuation Allowance -Available for Sale Security 80,800 FV of Investment in Available for Sale Security 444,400 Investment in Imboden Inc. 1,100,207 Total Investments 1,544,607 Shareholders' Equity (partial) Retained Earning 380,000 Accumulated OCI OCI -Available for sale security 80,800 Total Stockholders' Equity 460,800
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