Blize 2. Prepare the investment-related curens asset balance shert the d Fav Vau

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Blize 2. Prepare the investment-related curens asset balance shert the d Fav Vaue Accounting entries to record these transactions. 19 Financial Co. on December 31, 2017 How are unrealized gains or ents of scofield Financial Co? tor Scofield ksses on tradling investments presensed in the Einancial trading i PR 15-3A Stock securities investment transactions, equity method and available for-sale transactions Forte Inc. produces and sells theater set designs and costumes. The company began op erations on January 1, 2016. The following Iransactions relate to securities acqaired Forte Inc., which has a fiscal year ending on December 31 Jan. 22. Purchased 22,000 shares of Sankal Inc. as an available-for-sale security at per share, including the brokerage commission. Mar. 8. Received a cash dividend ot S0.22 per share on Sankal Inc. stoc Sept, 8. A cash dividend of $0. 25 per share was recelved on the Sank Oct. 17. Sold 3,000 shares of Sankal Inc. stock at $16 per share, less a beokerage al stock commission of $75 Dec. 31. Sankal Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $25 per share. Use the valuation allowanke for available-for-sale investments account in making the adjusitmet 2017 Purchased an influential interest in Imboden Inc. for $720,000 by purchasing 96,000 shares directly from the estate of thhe founder of Imboden Inc. There are 300,000 shares of Imboden Inc. stock outstanding Mar. 10. Received a cash dividend of $0.30 per share on Sankal Inc. stock. Sept. 12. Received a cash dividend of $0.25 per share plus an estra dividend of s0 05 per Dec. 31. Received $57,600 of cash dividends on Imboden Inc. stock. Imboden I share on Sankal Inc. stock. nc. reported net income of s150,000 in 2017. Forte Inc. uses the equity method of accounting for its investment in Imboden Inc. fair value of $22 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the decrease in fair value from $25 to $22 per share 31. Sankal Inc. is classified as an available-for-sale investment and is adjusted to a Instructions 1. Journalize the entries to record these transactions 2. Prepare the investment-related asset and stockholders' equity balance sheet presenta- tion for Forte Inc. on December 31, 2017, assuming the Retained Earnings balance on OBJ. 2,3, 4 December 31, 2017, is $389,000. The comparative unclassitied balance sheets by letters nctment reporting

Explanation / Answer

2) T Accounts:

1) Journal entries: Date Accounts Title Debit $ Credit $ 2016 22-Jan Available for sale security 396000 Cash 396000 (shares of Sankal Inc. purchased @ 18) 8-Mar Cash 4840 Dividend Revenue 4840 8-Sep Cash 5500 Dividend Revenue 5500 17-Oct Cash 48000 Loss on sale of security 6000 Available for sale security 54000 (being 3000 shares of Sankal Inc sold at 16) 31-Dec Available for sale security 133000 Valuation Allow. For available for sale investments 133000 (25-18)* (22000-3000) 2017 10-Jan Equity investment in Imboden Inc. 720000 Cash 720000 (being 32% stake purchased) 10-Mar Cash 5700 Dividend Revenue 5700 12-Sep Cash 5700 Dividend Revenue 5700 (cash dividend of $0.25 + 0.050 31-Dec Equity investment in Imboden Inc. 144000 Net Income of Imboden Inc. 144000 (450000*0.32=144000) 31-Dec Cash 57600 Equity investment in Imboden Inc. 57600 (being dividend received on equity investment) 31-Dec Valuation Allow. For available for sale investments 57000 Available for sale security 57000 (being fair valuation of sankal inc.)

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