Nos. 20- 24 Artwo rk C ny engaged in the following transactions during the curre

Question

Nos. 20- 24 Artwo rk C ny engaged in the following transactions during the current year. purchased 500 shares of Cryptic Company common stock for $20 per share plus a broker's commission of $300.500 shares is 1% of Cryptics outstanding stock ompa 1 2 bought 35,000 shares of the 100,000 shares of outstanding stock of Studio One 3 Cryptic Company paid a dividend of $1.5o per share and reported income of 4 Studio One reported income of $45,000 and paid no dividends Company for $350,000. Goodwill of $80,000 was included in the price. $600,000 5 The fair value of Cryptic stock was $17 per share and the value of Studio One Company stock was $12 at the end of the year. Please record all of the journal entries needed by Artwork. 20 (1)

Explanation / Answer

JOURNAL ENTRIES:

1 Investment in Cryptic company 10,300 Cash 10,300 (500*$20 + $300) 2 Investment in Studio one company 350,000 Cash 350,000 3 Cash 750 Investment revenue 750 (500 * $1.50) 4 Investment in Studio one company 15,750 Investment revenue 15,750 ($45,000 * 35%) 5 Unrealized holding loss on investments 1800 Fair value adjustment in Cryptic company 1800 (500*$17 - $10,300) Investment in Studio one company 70,000 Unrealized holding gain on investments 70,000 (35,000*$12 - $350,000)

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