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NARA [144]
3 years ago
8

The investments of Steelers Inc. include a single investment: 42,730 shares of Bengals Inc. common stock purchased on September

12, Year 1, for $14 per share including brokerage commission. These shares were classified as available-for-sale securities. As of the December 31, Year 1, balance sheet date, the share price declined to $12 per share.
Required:
A. Journalize the entries to acquire the investment on September 12 and record the adjustment to fair value on December 31, Year 1. Refer to the Chart of Accounts for exact wording of account titles.
B. How is the unrealized gain or loss for available-for-sale investments disclosed on the financial statements?
Business
1 answer:
Inga [223]3 years ago
7 0

Answer:

Explanation:

A. The journal entries are shown below:

On September 12

Investment A/c - Bengals Inc A/c Dr $598,220   (42,730 × $14)

          To Cash A/c                                     $598,220

(Being the acquired investment including brokerage commission is recorded)

On December 31

Unrealized gain or loss on available-for-sale securities A/c Dr $85,460            

            To Valuation allowance for available-for-sale securities $85,460

(Being decline in share value is recorded)

The computation is shown below:

= 42,730 shares × ($14 per share - $12 per share)

= 42,730 shares × $2 per share

= $85,460

B. The unrealized gain or loss for available-for-sale investments is shown in the Stockholder equity section on the balance sheet. It is to be shown in the negative item in the equity section.

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I got 100k for the balance of the investment when I did the math so how is it 98k?
ioda

Answer:

because you spend 1k or more

6 0
2 years ago
If the economy is at equilibrium above potential output:
babunello [35]

Answer:

B) There is an inflationary gap, and contractionary fiscal policy is appropriate.

Explanation:

One of the macroeconomic cases is inflationary gap. It means that the difference between the current level of real gross domestic product (GDP) and the predicted or forecasted GDP that would be experienced and achieved if an economy is at full employment. It could be claimed that when the demand for goods and services gets over the production in the factors such as: higher levels of overall employment, increased trade activities or increased government expenditure.

In order to overcome this gap, the contractionary fiscal policy must be considered. The mechanism of that policy is to increase the taxes decrease the government expenses due to inflationary pressures. This policy consequently will affect the level of consumption and private investment, respectively, these also will decrease the real GDP.

Other concept of macroeconomics is recessionary gap. In comparison to inflationary gap, this concept indicates the economy operating at lower level than its full equilibrium level, in turn, the level of real GDP is also less than full equilibrium level. We used to see this situation when the economy was intending to recess.

In order to overcome this gap, the expansionary fiscal policy will work well. Because of decreasing taxes and increasing government expenditures, the recessionary gap can be fought anymore. Since the taxes decreases, the business will revive and the confidence to the investment will increase, as a result the GDP will rise. Moreover, the growing government expenditures will stimulate the GDP to accrue.

To summarize, according to the question we need the gap in which the economy is above of potential, this means inflationary gap. Following this finding, the contractionary fiscal policy will be solution.

6 0
3 years ago
Clemente Co. owned all of the voting common stock of Snider Co. On January 2, 2012, Clemente sold equipment to Snider for $125,0
bonufazy [111]

Answer:

$60,000

Explanation:

Sales Price $125,000

Less BV $140, 000

Loss on Sale $15,000

Equipment transferred at BV (Cost $140,000

Less Accumulated Depreciation. $40,000 $100,000 Depreciation.

For 2012

($100,000/5) $40,000 = $60,000

Therefore the Book Value at 12/31/2012 is $60,000

6 0
3 years ago
Martinez Manufacturing applies overhead based on direct labor hours. The company estimates that their overhead for the year will
aev [14]

Answer:

The correct answer is C: underapplied by $2,500

Explanation:

Giving the following information:

Martinez Manufacturing applies overhead based on direct labor hours.

The company estimates that their overhead for the year will be $180,000 and that they will use 72,000 direct labor hours.

During the year, Martinez Manufacturing used 75,000 direct labor hours and actual overhead costs were $190,000

We need to calculate if the overhead was under or over applied and in what amount.

Predetermined overhead rate= total estimated manufacturing overhead for the period/ total amount of allocation base

Predetermined overhead rate= 180000/72000= $2.5 an hour

Now, we can calculate the amount of overhead allocated:

Overhead allocated= 75000 hours*2.5= $187,500

Over/under applied= actual overhead - allocated overhead= 190,000 - 185,500= $2,500 underapplied

7 0
3 years ago
Goofy Inc. had accounts receivable of $200,000 and an allowance for uncollectible accounts of $8,500 just before writing off as
SpyIntel [72]

Answer

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

Download xlsx
7 0
3 years ago
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