On January 2, 2016, Sanborn Tobacco Inc. bought 5% of Jackson Industry\'s capita

Question

On January 2, 2016, Sanborn Tobacco Inc. bought 5% of Jackson Industry's capital stock for $109 million as a temporary investment Sanborn classified the securities acquired as available-for-sale. Jackson Industry's net income for the year ended December 31, 2016, was $139 million. The fair value of the shares held by Sanborn was $136 million at December 31, 2016. During 2016, Jackson declared a dividend of $84 million. Required: 1. Prepare all appropriate journal entries related to the investment during 2016. (f no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place i.e. 5,500,000 should be entered as 5.5).)

Explanation / Answer

1.

2

Investment revenue is $4.2 millions =$ 84 Millions *5%

*All amounts in million$

S.NO. Date Details Dr. $ Cr. $ 1 2-Jan Investment in Jackson shares 109 Cash 109 (For buying shares in Jackson co.) 2 No Entry (For net income) 3 31-Dec Cash 4.2 Investment Revenue 4.2 (for Receiving dividend @ $84 Millions*5%) 4 31-Dec Fair Value adjustment 27 Net unrealized holding gains and losses 27 (To adjustment for fair value gain $136-$109 million)

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.