Sping 018 ACCT 1020, Test 2 PROBLEM 3, 10 pointe Kramer Corporation had the foll

Question

Sping 018 ACCT 1020, Test 2 PROBLEM 3, 10 pointe Kramer Corporation had the following Iong tenn investment transactions, Prepare tre jounal ontriea to record the following traneactions in the space provded bolon 02 Purchased 8,250 sharoa of Opio, Ino for S42 per share plus 5400 in fous and commissions. Opie has 15,000 shares issuod and outstanding and Krarners sharos represent .' 35% ownership of Opio roquiring ,he, use of the "squity method of accounting for investments Received a cash dividend of $3 per share from Ople, Inc Oct 15 Dec 31 2013 Opie, Ine reported a net loss of $00,000 for the year Sold 2,625 sharon of Oplo, Inc, for $48 per share less $200 in fees and commisslons Jul 15 Date Account DR CR Swanson Page 7 of 9

Explanation / Answer

Number of shares issued and outstanding 15000 Number of shares purchased 5250 Percentage of shares purchased=5250/15000 35% 0.350 Investment is above 20% of shares Equity method should be used JOURNAL ENTRY Date Account Titles and explanation Debit Credit Jan2.2017 Investment in Opio Inc. $        220,900 (5250*42+400) Cash $ 220,900 (To record investment in Opio Inc) .Oct15, 2017 Cash $          15,750 (3*5350) Investment in Opio Inc. $    15,750 (To record receipt of dividend from Opio Inc) Dec.31,2017 Equity in "Opio Inc"- Loss $          23,100 (0.35*66000) Investment in Opio Inc. $    23,100 (To record equity loss on investment ) .June15, 2018 Cash $        117,925 (2625*45-200) Investment in Opio Inc. $    91,025 (2625/5250)*(220900-15750-23100) Gain on sale of investment in Opio Inc $    26,900 (117925-91025)

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