Edelman Inc. acquired 10% of the 520,000 shares of common stock of Schuberger Co

Question

Edelman Inc. acquired 10% of the 520,000 shares of common stock of Schuberger Corporation at a total cost of $12 per share on June 17, 2017. On September 3, Schuberger declared and paid a $145,000 dividend. On December 31, Schuberger reported net income of $505,000 for the year. 2. Wen Corporation obtained significant influence over Hunsaker Company by buying 30% of Hunsaker's 154,000 outstanding shares of common stock at a cost of $15 per share on January 1, 2017. On May 15, Hunsaker declared and paid a cash dividend of $196,000. On December 31, Hunsaker reported net income of $257,000 for the year. Prepare all necessary journal entries for 2017 for (a) Edelman and (b) Wen.

Explanation / Answer

$624,000

(To record purchase of 52,000 shares(5,200,000*10%)

of Stillwater Co. stock)

Dr Cash

Dividend Revenue ($145,000 *10%%)

(To record purchase of 61,600shares

of North Sails’ stock)

(To record receipt of cash dividend)

Dr Stock Investments

(To record 30% equity in North Sails’

net income)

(1) June 17 2017 Dr Stock Investments(52,000*12)

$624,000

Cr Cash $624,000

(To record purchase of 52,000 shares(5,200,000*10%)

of Stillwater Co. stock)

Sep3

Dr Cash

$14,500

Dividend Revenue ($145,000 *10%%)

$14,500 (To record receipt of cash dividend) (2) Jan 1,2017 Dr Stock Investments (154,000 * 40% $15) $693,000 Cr Cash $693,000

(To record purchase of 61,600shares

of North Sails’ stock)

May 15 Dr Cash $58,800 Cr Stock Investments($196,000*40%) $58,800

(To record receipt of cash dividend)

Dec31

Dr Stock Investments

$77,100 Cr Revenue from Stock Investments(257,000*30% $77100

(To record 30% equity in North Sails’

net income)

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