a) Prepare all journal entries necessary for the investment-related transactions in 2021. 1. b) Prepare all journal entries necessary for the sale of the shares on February 15, 2022.
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- On January 2, 2021, Normal Inc. acquired 15% interest in Laco Co. by paying P1,500,000 for 7,500 ordinary shares. On this date, the net assets of Laco Co. totaled P9 million. The investment was classified as a financial asset at fair value through other comprehensive income. The fair values of Laco Co.’s identifiable assets and liabilities approximate their book values. On August 1, 2021, Normal received dividends of P4 per share from Laco Co. Fair value of the stocks on December 31, 2021 was P190. Net income reported by Laco for the year ended amounted to P1,500,000. On July 1, 2022, Normal Inc. paid P1 million to purchase 5,000 additional shares of Laco Co. from another shareholder. On this date the fair value of the net assets exceeds carrying value by P500,000 attributable to depreciable asset with estimated remaining life of 5 years. On February 1, 2022, cash dividends of P5 were received while dividends of P6 were received on August 1, 2022. Net income reported for the year ended…On January 2, 2021, Normal Inc. acquired 15% interest in Laco Co. by paying P1,500,000 for 7,500 ordinary shares. On this date, the net assets of Laco Co. totaled P9 million. The investment was classified as a financial asset at fair value through other comprehensive income. The fair values of Laco Co.s identifiable assets and liabilities approximate their book values. On August 1, 2021, Normal received dividends of P4 per share from Laco Co. Fair value of the stocks on December 31, 2021 was P190. Net income reported by Laco for the year ended amounted to P1,500,000. On July 1, 2022, Normal Inc. paid P1 million to purchase 5,000 additional shares of Laco Co. from another shareholder. On this date the fair value of the net assets exceeds carrying value by P500,000 attributable to depreciable asset with estimated remaining life of 5 years. On February 1, 2022, cash dividends of P5 were received while dividends of P6 were received on August 1, 2022. Net income reported for the year ended…On January 2, 2021, Zwick Company purchased 15% of Handy Corporation's common stock for $51,000. Handy's net income for the years ended December 31, 2021, and December 31, 2022, were $14,000 and $53,000, respectively. During 2021, Handy declared and paid a dividend of $66,000. On December 31, 2021, the fair value of the Handy stock owned by Zwick had increased to $67,000. How much should Zwick show in the 2021 income statement as income from this investment? Multiple Choice $22,000. $25,900. $16,000. $9,900.
- On February 2, 2020, Groove Company purchased 15% of Pop Company's common stock for $54,00O. Pop's net income for the years ended December 31, 2020, and December 31, 2021, were $16,000 and $54,000, respectively. On July 30, 2020, Pop declared and paid a dividend of $66,500. On December 31, 2020, the fair value of the Pop stock owned by Groove had increased to $72,000. How much should Groove show in the 2020 income statement as income from this investment? Multiple Choice $18,000. $9,975. $24,000. $27,975.On January 1, 2021, TAPANG Company acquired 5,000 shares of FVOCI securities of AKO Company at P100,000 plus brokerage expense of P10,000. On February 14, 2021, AKO Company ordinary share was split on a 4-for-2 basis. The fair value at December 21, 2021 amounted to P20 per share. Compute for the total number of shares at the end of the year. Compute for the unrealized gain or (loss) to be presented in the other comprehensive income for the current year. Prepare all the necessary journal entries.On January 2, 2020, Howdy Doody Corporation purchased 17% of Ranger Corporation's common stock for $55,000. Ranger's net income for the years ended December 31, 2020, and December 31, 2021, were $11,000 and $56,000, respectively. During 2020, Ranger declared and paid a dividend of $67,500. On December 31, 2020, the fair value of the Ranger stock owned by Howdy Doody had increased to $72,000. How much should Howdy Doody show in the 2020 income statement as income from this investment? $11,475. $23,000. $17,000. $28,475.
- On July 1, 2019, Jude Company purchased 10,000 shares of Rigby Companyordinary shares for P510,000 plus broker's fees of P5,100. The shares represented25% of the outstanding shares of Rigby and Jude has an ability to exercisesignificant Influence over the financial and operating policies of Rigby. Theacquisition cost reflected book value of the investee's net assets as of that date.Rigby reported profit of P850,000 (evenly earned) for the year ended December31, 2019. At December 31, 2019, Rigby declared and paid cash dividends ofP320,000.At January 1, 2020, Jude Company sold one-half of the investment in Rigby forP275,000 less broker's fees of P2,750. Jude Company does not have the intentionto dispose the remaining securities in the immediate future. For the year endedDecember 31, 2020, Rigby reported profit of P980,000 and declared and paid cashdividends of P450.000.Market values per share of Rigby ordinary shares were as follows:December 31, 2019 - P55December 31, 2020 - P49 How…On January 1, 2021, Alamar Corporation acquired a 36 percent interest in Burks, Inc., for $198,000. On that date, Burks’s balance sheet disclosed net assets with both a fair and book value of $353,000. During 2021, Burks reported net income of $84,000 and declared and paid cash dividends of $24,000. Alamar sold inventory costing $27,000 to Burks during 2021 for $35,000. Burks used all of this merchandise in its operations during 2021. Prepare all of Alamar’s 2021 journal entries to apply the equity method to this investment 2. Record the 36 percent income earned by Alamar from this investment.On January 1, 2021, Alamar Corporation acquired a 36 percent interest in Burks, Inc., for $198,000. On that date, Burks’s balance sheet disclosed net assets with both a fair and book value of $353,000. During 2021, Burks reported net income of $84,000 and declared and paid cash dividends of $24,000. Alamar sold inventory costing $27,000 to Burks during 2021 for $35,000. Burks used all of this merchandise in its operations during 2021. Prepare all of Alamar’s 2021 journal entries to apply the equity method to this investment 1. Record the acquisition of a 36 percent interest in Burks
- At the beginning of 2019, Enif Co. purchased 100,000 of Cetus Co.'s ordinary shares for P3,000,000. The entity designated the investment as financial asset at fair value through profit or loss. On June 30, 2019, Cetus declared a P1.50 cash dividend to all of its shareholders of record as of July 31, to be distributed on August 31. On September 15, Enif sold 20,000 shares of its investment in Cetus, receiving P650,000. At the end of 2019, Cetus's shares had a fair value of P31 per share. Suppose that instead of declaring cash dividends, Cetus declared a 20% share dividend. Prepare the necessary journal entries on the books of Enif.On January 1, 2021, Alamar Corporation acquired a 42 percent interest in Burks, Inc., for $185,000. On that date, Burks’s balance sheet disclosed net assets with both a fair and book value of $337,000. During 2021, Burks reported net income of $84,000 and declared and paid cash dividends of $24,000. Alamar sold inventory costing $29,000 to Burks during 2021 for $41,000. Burks used all of this merchandise in its operations during 2021. Prepare all of Alamar’s 2021 journal entries to apply the equity method to this investment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)On January 1, 2020, Pail Corporation acquired 75 percent of Sand Company's common stock for $525,000 cash. The fair value of the noncontrolling interest at that date was determined to be $175,000. For the year ended December 31, 2020 Pail reported Dividends of $11000 on its general ledger. Sand reported Dividends of $14000 on its general ledger. What amount of DIVIDENDS would be reported on the 12/31/20 consolidated Statement of Retained Earnings? BE SURE TO TYPE A SIMPLE NUMBER WITH NO COMMAS OR DOLLAR SIGNS. FOR EXAMPLE, TYPE 1000 INSTEAD OF $1,000.