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3 years ago

Kampus Corporation had the following eight investment transactions or events:

Business

1 answer:

Fed [463]3 years ago

3 0

Answer:

Kampus Corporation

Journal Entries:

Jan 1 Debit Bonds Receivable (Argon Co.) $10,000

Credit Cash $10,000

To record a short-term investment in available-for-sale (AFS) debt securities.)

Jan 3 Debit Investments (Long-term) in Elmer, Inc. $36,000

Credit Cash $36,000

To record the long-term investment (1,200 shares of Elmer, Inc. at $30 each.)

Mar 31 Debit Cash $300

Credit Dividend Received $300

To record dividend received from Elmer's investment

($0.25 per share of 1,200 shares).

Jun 1 Debit Investment in Logan, Inc. $300,000

Credit Cash $300,000

To record the investment in 5,000 shares of $60 per share, representing a 40% equity ownership.

Sep 30 Debit Cash $10,000

Credit Investment in Logan, Inc. $10,000

To record dividend received from investment in Logan, Inc. ($2 per share of 5,000 shares).

Dec 31 Debit Investment in Logan, Inc. $60,000

Credit Retained Earnings $60,000

To record 40% share of the Net income of $150,000 in Logan, Inc.

Dec 31 No Journal Required: Argon Co. bond had a fair (market) value of $12,000.

Dec 31 Debit Unrealized Loss from Investment in Elmer, Inc. $6,000

Credit Investment in Elmer, Inc. $6,000

To record $5 lost in the (market) value of $25 per share.

Explanation:

a) Data and Analysis:

Jan 1 Bonds Receivable (Argon Co.) $10,000 Cash $10,000

a short-term investment in available-for-sale (AFS) debt securities.)

Jan 3 Investments (Long-term) in Elmer, Inc. $36,000 Cash $36,000 1,200 shares of Elmer, Inc. at $30 each.

Mar 31 Cash $300 Dividend Received $300

$0.25 per share of 1,200 shares.

Jun 1 Investment in Logan, Inc. $300,000 Cash $300,000

5,000 shares of $60 per share, represent a 40% ownership.

Sep 30 Cash $10,000 Dividend Received $10,000

$2 per share of 5,000 shares.

Dec 31 Investment in Logan, Inc. $60,000 Retained Earnings $60,000

40% share of the Net income of $150,000 in Logan, Inc.

Dec 31 No Journal Required: Argon Co. bond had a fair (market) value of $12,000.

Dec 31 Unrealized Loss from Investment in Elmer, Inc. $6,000 Investment in Elmer, Inc. $6,000 (market) value of $25 per share.

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