On January 1, 2015 the West Company made 2 purchases: purchased 400 of the 1000

Question

On January 1, 2015 the West Company made 2 purchases: purchased 400 of the 1000 shares of Kardashian Company for $60,000. At this time Kardashian book value of assets was $80,000 any excess is attributable to a car with a 5 year life and no salvage purchased 200 of the 100,000 shares of Madona Company for $40,000. All of Madonna's assets had a book value equal to market value any excess is attributable to goodwill 1-Jul Kardashian Company paid a $3 per share dividend 1-Aug Madonna Company paid a $2 per share dividend 31-Dec Kardashian Company reported income of $19000; its stock is selling for $111 per share 31-Dec Madonna Company reported income of $110,000; its stock is selling for $93 per share 2016 1-Jul Kardashian Company paid a $1 per share dividend 1-Aug Madonna Company announced they would not be paying any dividends this year 31-Dec Kardashian Company reported a loss of $3000; its stock is selling for $96 per share 31-Dec Madonna Company reported a loss of $40,000; its stock is selling for $101 per share 2017 January 5th West sold its entire investment in Kardashian for $98 per share January 5th West sold its entire investment in Madonna for $102 per share MAKE ALL JOURNAL ENTRIES WEST MAKES IN CONNECTION WITH ITS INVESTMENT IN KARDASHIAN AND MADONNA FOR 2015, 2016 AND 2017... .DON'T FORGET TO RECORD WEST'S PURCHASE OF THE STOCK REQUIRED:

Explanation / Answer

In the books of West Company:

Date Account Titles Debit Credit 2015 $ $ January 1 Equity Investment : Kardashian Company 60,000 Cash 60,000 January 1 AFS Investment: Madona Company 40,000 Cash 40,000 July 1 Cash 1,200 Equity Investment : Kardashian Company 1,200 Aug 1 Cash 400 Dividend Revenue 400 Dec 31 Equity Investment : Kardashian Company 7,600 Income from Equity Investment ( $ 19,000 x 40%) 7,600 Dec 31 Unrealized Loss on AFS Investment : Equity $ ( 200 - 93) x 200 shares 21,400 Fair Value Adjustment : AFS Investment 21,400 2016 July 1 Cash 400 Equity Investment : Kardashian Company 400 Aug 1 No journal entry required Dec 31 Loss on Equity Investment 1,200 Equity Investment : Kardashian Company 1,200 Dec 31 Fair Value Adjustment : AFS Investments 1,600 Unrealized Gain on AFS Investment $ ( 101 - 93) x 200 shares 1,600 2017 Jan 5 Cash ( 400 x $ 98) 39,200 Loss on Sale of Equity Investment 25,600 Equity Investment : Kardashian Company 64,800 Jan 5 Cash 20,400 Loss on Sale of Investment 19,600 AFS Investment : Madona Company 40,000

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