Acme Company Purchase Shares of baker Inc. Baker Inc, Is significantly influence
ID: 2461191 • Letter: A
Question
Acme Company Purchase Shares of baker Inc. Baker Inc, Is significantly influenced by acme Company.
A-- Show the journal entries for the transactions of April 1, 2015, and December 31, 2015.
B-- Waht is the balance ( dollar value and number of shares ) in the equity investment account, Baker, after the sale of the shares on December 31, 2015 ?
Jan 14, 2014 Purchase 18,000 common shares of Baker fir $ 156,000. Thais represents 20% of baker shares. Oct 1, 2014 Baker declared and paid a cash dividend of $ 2.60 per share. Dec 31, 2014 Baker announced net income for the year $ 650,000. April 1, 2015 Baker declered and paid a cash dividend of $ 2.70 per share. Dec 31, 2015 Baker announced net income for the year is $ 733,100. Dec 31, 2015 Acme sold 6,000 shares of Baker for $ 104,320.Explanation / Answer
Solution :
A..
Date
Account title
Debit
Credit
Jan 14, 2014
Investment in Baker Inc
156,000.00
cash
156,000.00
Oct 1, 2014
cash
46,800.00
Investment in Baker Inc
46,800.00
(18000 shares*2.6 per share)
Dec 31, 2014
Investment in Baker Inc
130,000.00
Income from investment
130,000.00
(650000*20%)
April 1, 2015
cash
48,600.00
Investment in Baker Inc
48,600.00
(18000 shares*2.7 per share)
Dec 31, 2015
Investment in Baker Inc
146,620.00
Income from investment
146,620.00
(733100*20%)
Dec 31, 2015
cash
104,320.00
Loss on sale of investment(112406.67-104320)
8,086.67
Investment in Baker Inc
112,406.67 **
B..
Date
Particulars
No of shares
$
Jan 14, 2014
Purchase
18,000.00
156,000.00
Oct 1, 2014
Dividend
- 46,800.00
Dec 31, 2014
Investment income
130,000.00
April 1, 2015
Dividend
- 48,600.00
Dec 31, 2015
Investment income
146,620.00
Total
18,000.00
337,220.00
Dec 31, 2015
Sale
- 6,000.00
- 112,406.67**
Dec 31,2015
Balance
12,000.00
224,813.33
**337220*6000/18000=112406.67
Date
Account title
Debit
Credit
Jan 14, 2014
Investment in Baker Inc
156,000.00
cash
156,000.00
Oct 1, 2014
cash
46,800.00
Investment in Baker Inc
46,800.00
(18000 shares*2.6 per share)
Dec 31, 2014
Investment in Baker Inc
130,000.00
Income from investment
130,000.00
(650000*20%)
April 1, 2015
cash
48,600.00
Investment in Baker Inc
48,600.00
(18000 shares*2.7 per share)
Dec 31, 2015
Investment in Baker Inc
146,620.00
Income from investment
146,620.00
(733100*20%)
Dec 31, 2015
cash
104,320.00
Loss on sale of investment(112406.67-104320)
8,086.67
Investment in Baker Inc
112,406.67 **
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