Answer:
A. 18-03
Dr Investment in AFS $260,000
Cr Cash $260,000
30-06
Dr Cash $7,500
Cr Dividend Revenue $7,500
31-12
Dr Securities Fair value Adjustment $40,000
Cr Unrealized Holding Gain $40,000
B. 01/01
Dr Investment in S Corp $81,000
Cr Cash $81,000
15/06
Dr Cash $10,800
Cr Investment in S Corp $10,800
31/12
Dr Investment in S Corp $25,500
Cr Revenue from Investment
Explanation:
Preparation of all necessary journal entries in 2017 for both situations.
A. Journal entries
18-03
Dr Investment in AFS $260,000
(200000*10%*13)
Cr Cash $260,000
(To Record investment made)
30-06
Dr Cash (75000*10%) $7,500
Cr Dividend Revenue $7,500
(To Record Dividend Earned)
31-12
Dr Securities Fair value Adjustment $40,000
Cr Unrealized Holding Gain $40,000
( 20000*2)
(To Record Investment at Fair Value(
B. Journal Entries
01/01
Dr Investment in S Corp $81,000
(30000*30%*9)
Cr Cash $81,000
(To Record investment made)
15/06
Dr Cash $10,800
(36000*30%)
Cr Investment in S Corp $10,800
(To Record Dividend Earned)
31/12
Dr Investment in S Corp $25,500
(85000*30%)
Cr Revenue from Investment $25,500
(To Record Income earned)
