Question

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

Answer 1

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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