Chapter 12 Investments in equity sec. #1 (1 pt.) O Saved On January 2, 2018, San

Question

Chapter 12 Investments in equity sec. #1 (1 pt.) O Saved On January 2, 2018, Sanborn Tobacco Inc. bought 5% of Jackson Industry's capital stock for $99 million. Jackson Industry's net income for the year ended December 31, 2018, was $129 million. The fair value of the shares held by Sanborn was $116 million at December 31, 2018. During 2018, Jackson declared a dividend of $50 million. Required: 1. Prepare all appropriate journal entries related to the investment during 2018. 2. Assume that Sanborn sold the stock on January 2, 2019 for $128 million. Prepare the journal entries Sanborn would use to record the sale. points Complete this question by entering your answers in the tabs below. eBook Required 1 Required 2 Prepare all appropriate journal entries related to the investment during 2018. (If 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).) View transaction list Journal entry worksheet

Explanation / Answer

Trans Accounts Title Dr Cr 1 Investment in common shares $99 Cash $99 2 No journal entry required for net income 3 Cash 2.5 Dividend Revenue/Investment revenue 2.5 (50*5%) 4 Fair value Adjustment (116-99) 17 Unrealized holding gains and losses- OCI 17 ans 2 Cash 128 Jan 2 2019 Unrealized holding gains and losses 17 Loss on sale of investment 29 Investment in common shares (99+17) 116

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