E connect ACCOUNTING apters 10-13+ Appendix D IThe following information applies

Question

E connect ACCOUNTING apters 10-13+ Appendix D IThe following information applies to the questions displayed below] On August 4, 2014, Cable Corporation purchased 2.600 shares of Satre Company for $98.800. The following Information applies to the fair value of Satre Company Per Share 42 $ 50 12/31/2014 12/31/2015 12/31/2016 34 Satre Company declares and pays cash dividends of $4 per share on June 1 of each year Required: 1. Prepare journal entries to record the facts in the case, assuming that Cappio considers the shares to be available-for-sale securities TIP: Net unrealized losses/gains on available-for-sale securities are reported in stockholders' equity. (If no entry is required for a transaction/event, select No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 6

Explanation / Answer

Answer 1. - Available for Sale Journal Entry Date Particualrs Dr. Amt. Cr. Amt. 4/8/2014 Investment in SAS                                                 Dr.          48,000 To Cash          48,000 (record the purchase of Available for Sale securities). 12/31/2014 Valuation Allowance - Investment in SAS    Dr.          12,000 ($30-$24) X 2000 Shares To Net Unrealized Gain / Loss          12,000 (Record the year end adjustment to market) 1/6/2015 Cash                                                                              Dr.            6,000 $3 X 2,000 Shares To Investment Revenue            6,000 $3 X 2,000 Shares (record the dividend received) 12/31/2015 Net Unrealized Gain / Loss                                  Dr.          10,000 ($30 - $25) X 2,000 Shares To Valuation Allowance - Investment in SAS          10,000 (Record the year end adjustment to market) 1/6/2016 Cash                                                                              Dr.            6,000 $3 X 2,000 Shares To Investment Revenue            6,000 $3 X 2,000 Shares (record the dividend received) 12/31/2016 Net Unrealized Gain / Loss                                  Dr.          10,000 ($25 - $20) X 2,000 Shares To Valuation Allowance - Investment in SAS          10,000 (Record the year end adjustment to market) Answer 3. - Equity Method Journal Entry Date Particualrs Dr. Amt. Cr. Amt. 4/8/2014 Investment in MAxwell                                        Dr.          98,800 To Cash          98,800 (record the purchase of shares of Maxwell company). 12/31/2014 Investment in MAxwell                                        Dr.          17,820 $54,000 X 33% To Equity in Investee Income          17,820 (Record the share of profits in Maxwell Company) 1/6/2015 Cash                                                                              Dr.          10,400 $4 X 2,600 Shares To Investment in Maxwell          10,400 $4 X 2,600 Shares (record the dividend received) 12/31/2015 Investment in MAxwell                                        Dr.          17,820 $54,000 X 33% To Equity in Investee Income          17,820 (Record the share of profits in Maxwell Company) 1/6/2016 Cash                                                                              Dr.          10,400 $4 X 2,600 Shares To Investment in Maxwell          10,400 $4 X 2,600 Shares (record the dividend received) 12/31/2016 Investment in MAxwell                                        Dr.          17,820 $54,000 X 33% To Equity in Investee Income          17,820 (Record the share of profits in Maxwell Company)

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