On January 2, Ubuy.com paid $160,000 to acquire 25 percent (16,000 shares) of th

Question

On January 2, Ubuy.com paid $160,000 to acquire 25 percent (16,000 shares) of the common stock of E- Net Corporation. The accounting period for both companies ends December 31. July 2 E-Net declared and paid a cash dividend of $5 per share. Dec. 31 E-Net reported net income of $260,000. Required Indicate the effects (direction and amount) of the transactions listed above. (Enter any decreases to account balances with a minus sign.) Balance Sheet Income Statement Liabilities Equity Revenues Expenses Net Income Date Assets Liabilities Stockholders Jan. 2 Jul. 2 Dec. 31

Explanation / Answer

1. Effect of the transaction on Ubuy.com:

2. Trading Securities purchased by Princeton Company:

Transaction Assets Liabilities Equity Revenue Expenses NI Jan 2 +160,000, -160,000 =0 0 0 0 0 0 July 2 +80,000 - 80,000 =0 0 0 0 0 0 Dec31 +65,000 0 +65,000 65,000 0 65,000

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