During the current year, Bradford Company purchased some of the 90,000 shares of common stock, par $ 6 , of Hall, Inc., as a lon

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2 years ago

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During the current year, Bradford Company purchased some of the 90,000 shares of common stock, par $ 6 , of Hall, Inc., as a lon

g-term investment. The annual accounting period for each company ends December 31. The following transactions occurred during the current year:
Jan. 7 Purchased 40,500 shares of Hall stock at $ 30 per share.
Dec. 31 a. Received the current year financial statements of Hall, which reported net income of $ 215,000 . b. Hall declared and paid a cash dividend of $ 1.50 per share. c. Determined that the current market price of Hall stock was $ 41 per share.
Required:
Indicate how the Operating Activities and Investing Activities sections of the cash flow statement (indirect method) will be affected by each transaction.

Business

1 answer:

jok3333 [9.3K] · Answer 1 · 2023-12-30T00:19:45+03:00

It's a long-term investment and the company owns 45% of shares of Hall Inc. Hence the company exercises significant influence over Hall Inc.

The various journal entries on the transaction occured would be made as under:

No. Account Name Debit Credit

1. Investment 1296000

Cash 1296000

2. Investment 97650

Investment income

(217000 x 45%) 97650

3. Cash 64800

Investment (1.60 x 40500) 64800

The effect on the cash flow statement will be:

Operating activities:

No effect 0

Investing activities:

Purchase of investment -1296000

Receipt of dividends 64800

The current stock price is also known as the marketplace fee. it's far the fee at which a share of inventory or every other security is ultimately traded. In an open market, the modern charge functions as a baseline . Divide equity by the wide variety of stocks issued. If, say, the company's well worth $10 million and there are 10,000 shares, the share fee of every percentage is $1,000.

Learn more about The share market here:- brainly.com/question/690070

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