222

$show=home

Welcome to Accounting Education

The Accounting University with 3400+ Accounting contents as study material which can watch, read and learn anyone, anywhere.

Start your studies

Our library

Accounting | Auditing | Finance | Accounting software | Inspire

Take Your Course | Learn Accounting Skill

Choose Your Subject

$show=home

Journal Entries $type=three$count=6$author=hide$comment=hide$label=hide$date=hide$show=home$s=0

Balance Sheet $type=three$count=6$author=hide$comment=hide$label=hide$date=hide$show=home$s=0

Journalize the Entries to Record the Transactions of Investment

0 0
These are journal entries of  2 years'  investments transactions. Rules of double entry system will apply on these investment transactions. See detail problem before getting its solution.


Date of Asking Question
3/2/2014
Name
Candy


Country
USA
Title of Question
help with a question
Detail of Question
In problem PR 15-1A I need help find out to work the part one and part 2 of the problem.

In acct 2 text book warren reeve duchac accounting 23e. pages 697-698-- roman products, Inc. is a wholesaler of men hair products. the company began operations on Jan. 1, 2010. the following transactions relate to securities acquired by roman products inc. which has a fiscal year ending in Dec.31 2010. I am in need of how to work out the excel problems .

 Year 2010

 jan.3 purchased 3000 shares of whalen inc. as an available for sale investment at $46 per share including the brokerage commission

 july 6 split whalen inc. stock 2 for 1 and received the regular cash dividend of $0.60 per share on the whalen inc. stock after the split.

 Oct. 14 sold 900 shares of whalen inc stock at $25 per share , less a brokerage commission of $50.

 Dec. 9 Received the regular cash dividend of $0.60 per share .

 Dec. 31  Whalen inc. is classified as an available for sale investment and is adjusted to fair value of $21 per share. Use the Valuation allowance for available for sale investment account in making the adjustment.

 Year 2011

 Jan 5 Purchased an influential interest in Tasmania co. for $620,000 by purchasing 60,000 shares directly from the estate of the founder of Tasmania . there are 150,000 share of Tasmania Co. stock outstanding .

 July 8. received the regular cash divided of $0.70 per share on whalen inc. stock.

 Dec.8. received the regular cash dividend of $0.70 per share plus an extra dividend of $0.15 per share on whalen inc. stock.

 31 received $18,000 of cash dividends on Tasmania Co. stock Tasmania Co. reported net income of $74,000 in 2011. Roman products uses the equity method of accounting for its investment in Tasmania Co.

 31. Whalen Inc. is classified as an available for sale investment and is adjusted to fair value of $26 per share. use the valuation allowance for available for sale investments account in making the adjustment.

 You have to :

 1. Journalize the entries to record the preceding transactions.
Category
Accounting Solutions

Solution 

Journal Entries 

Jan. 3,  2010

Shares Investments in Whalen Inc. Dr. 138000

Bank Account Cr. 138000

July 6, 2010

Now, when in 6 july 2010, shares' stock will be split 2 for every 1, it means number of shares will be double. So, dividend will increase as per this rule

Dividend Received

3000 X 2 X 0.60 = $ 3600

Bank Account Dr. 3600

Dividend Received Account Cr.3600

Oct. 14, 2010 

Sold 900 shares @ $ 25 per share less brokerage commission $ 50

If we want to calculate the profit on this sale, we have to calculate the real cost of these shares.

Cost of 900 shares

= 138000 X 900/ 6000 = $ 20700

Net sale value of 900 shares = (900 X $ 25 ) - $50 = $ 22450


Profit on sale of 900 shares = $ 1750


Bank Account Dr. 22450

Share investment in Whalen Inc. Cr. 20700

Profit on Sale of Share Investment in Whalen Inc. Cr. 1750

Dec. 9, 2010

Balance shares in hand = 6000 -900 = 5100

Dividend = 0.60 x 5100 =$ 3060


Bank Account Dr. 3060

Dividend Received Cr. 3060

Dec. 31, 2010


 Fair Value of Per share after sale

= ( 138000 - 20700 )/ 5100 =  $ 23 per share

New fair value = $ 21

Unrealized loss due to changing  fair value

= $ 23 -$ 21 = $ 2

5100 X 2 =  $ 10200

Unrealized loss of shares investment in Whalen Inc. Dr. 10200

Valuation Allowance for Available-for-Sale Investment Cr. 10200

Jan. 5, 2011

 Investments in Tasmania Co. Dr. 620000

Bank Account Cr. 620000

July 8, 2011

Balance shares in hand = 6000 -900 = 5100

Dividend = 0.70 x 5100 = $ 3570


Bank Account Dr. 3570

Dividend Received from Whalen Inc.  Cr. 3570

Dec. 8, 2011

Balance shares in hand = 6000 -900 = 5100

Dividend = (0.70+ 0.15) x 5100 = $ 4335


Bank Account Dr. 4335

Dividend Received from Whalen Inc.  Cr. 4335


Dec. 31, 2011 

Bank Account Dr. 18,000
Investment in Tasmania Inc.  Cr.18,000

Dec. 31, 2011

.Fair value increased from $ 21 per share to $ 26 per share

Unrealized gain due to changing  fair value

= $ 26 -$ 21 = $ 5

5100 X 5 =  $ 25500

Valuation Allowance for Available-for-Sale Investment Dr. 25500

Unrealized Gain of shares investment in Whalen Inc. Cr. 25500


Categories:

Comments

In comment, you can give your feedback, reviews, ideas for improving content or ask question relating to written content.

 


Name

access,2,account,86,accountant,95,Accounting,683,accounting definitions,99,accounting ebook,3,Accounting education,85,Accounting Education Ads Help,1,accounting procedure,2,accounting process outsourcing,2,Accounting Software,52,advance,3,advertising,6,africa,7,Amalgamation,6,amendments,16,Amortization,1,announcements,62,Annuity,2,assets,53,audit,47,auditing,41,Australia,2,B.Com.,22,balance sheet,87,bank,111,Bank reconciliation,12,banking,33,basic accounting,110,BBA,1,benefits,13,best,50,bill,12,black money,3,blog,12,bloggers,7,book keeping,4,bookkeeping,3,Branch Accounting - full tutorial,8,budget,35,Budget variance,13,business,65,businessman,9,CA,30,calculator,4,canada,3,capital,72,capital budgeting,27,career,21,cash,40,cash book,8,cash flow statement,11,Chiense,1,children,13,china,6,class,3,coaching,2,coins,2,college,6,commerce,10,commerce students,7,company,36,computer,9,computer accounting,1,conference,4,Contact vinod kumar,1,Control Your Spending,27,corporate accounting,69,cost,160,cost accounting,195,cost center,8,cost centre,1,CPA,2,credit,18,credit card,11,cs,10,currency,35,data,11,Debit and credit,17,debit cards,1,debt,62,debtor,21,degree,6,depletion,2,depreciation,38,Diwali Messages,12,documents,4,dollar,5,domain,3,Downloads,3,Dubai,1,e-accounting,17,earning,17,education,246,Education Loans,6,email,15,employee,4,EPF,2,ERP,7,euromoney,1,examination,7,excel,17,excise duty,6,expenses,65,facebook,7,factor of loan,1,fans,2,feature,32,fifo,5,FII,4,fiji,1,finacle,1,finance,823,Finance Journal Entries,6,Financial,134,financial accounting,147,Financial Statements,4,fire insurance,3,flickr,2,flow,4,forensic,4,forex,21,formula,8,france,1,fraud,6,free,2,fun,34,function,1,fund,48,GAAP,36,GDP,1,gdr,5,germany,1,gold,7,goodwill,4,goodwill accounting,3,google,34,google apps,3,google apps,1,google base,1,google buzz,1,google calendar,1,Google docs,38,google finance,3,google fusion tables,1,google talk,5,govt.,5,GST,33,guide,85,health,6,Hindi,2,Hindi Language,3,history,3,holding company,3,How to treat FBT in Tally 9,1,HRA,3,ICAI,11,ICAWI,3,ICICI Bank,1,IFRS,11,income,17,income statement,19,Income Tax,7,India,57,indian railway,1,Indonesia,1,inflation,4,inflation accounting,3,infographics,8,information,7,inspiration,176,insurance,14,insurance accounting,2,Intangible,3,interest,26,international,7,Internet,40,Introduction of Tally 9,1,inventory,41,investment,135,investment in Shares,6,invoice,3,IT,1,Japan,1,Job costing,4,journal entries,143,Journal Entries eBook Help,4,Kalculate,1,keyboard,3,kuwait,2,laptop,2,law,4,LBT,1,learning,36,lease,5,lecture,11,ledger,17,leducation,1,Leverage Analysis,7,liabilities,16,lifo,3,linkedin,1,loan,74,logical point,1,loss,5,loss of profit,1,M.Com.,5,m.phil,2,malaysia,3,management accounting,129,manual accounting,4,manufacturing account,1,market,11,marketing,3,mastercard,2,material,13,MBA,14,MCA,1,media,4,migration,2,mobile,9,money,61,ms word,3,ms. excel,14,multi currency in tally 9,1,Multicurrency Accounting,3,mutual fund,30,national security,1,new and sacrifice ratio,1,new york times,1,new zealand,1,news,1,NGO,5,nonprofit-accounting,6,North Georgia Mountains,1,Notification,1,NPV,17,NSE,1,odbc,2,office,10,oman,1,online application,2,online accounting,11,Online Accounting Course,5,otcei,1,pakistan,3,parents,3,Partnership,1,pay pal,3,pdf,4,Personal Finance,6,pie chart,1,pie chart of income,2,pnb,5,podcast,1,ppf,1,presentation,10,price,7,privacy policy,2,prof. vinod kumar,13,profit,24,profit and loss account,12,project management,11,provision,14,purchase,9,puzzles,2,quickbooks,2,Quote,22,quotes,42,quotes of svtuition,1,rating agency,2,ratio analysis,34,RBI,7,readers,13,real estate,13,rectification of errors,11,remote control,2,reports,10,reserves,8,responsibility accounting,4,retirement,2,revenue,3,Revenue reserves,2,review,7,risk,11,rupees,9,salary,5,sale,12,SAP,3,saudi arabia,1,saving,19,sbi,9,scholarship,2,school,1,SEBI,13,security,30,service tax,23,share,20,share trading,15,Shares,16,shri lanka,3,singapore,2,sms,6,social accounting,7,society,5,solution,219,South Africa,1,stock,24,stock exchange,22,structure,6,student,39,students,70,study,21,subsidiary company,2,svtuition,14,swiss bank,2,tally,100,tally 9,8,Tally 7.2,8,Tally 9,42,Tally.ERP 9,59,TallyPrime,1,tanzania,2,tax,94,Tax Accounting,30,TDS,15,teacher,62,teaching,112,technology,33,test,40,testimonial,15,testimonials,15,thailand,1,tips,60,trading,5,trading on equity,2,transaction,7,trend,12,trial balance,14,truthfulness,1,tuition,3,twitter,10,UAE,5,UGC - NET Commerce,13,UK,11,United Arab Emirates,1,university,9,usa,25,valuation,9,VAT,22,Video,36,Voucher and vouching,4,Wealth,8,wikipedia,25,working capital,29,youtube,14,
ltr
item
Accounting Education: Journalize the Entries to Record the Transactions of Investment
Journalize the Entries to Record the Transactions of Investment
Accounting Education
https://www.svtuition.org/2014/03/journalize-entries-to-record.html
https://www.svtuition.org/
https://www.svtuition.org/
https://www.svtuition.org/2014/03/journalize-entries-to-record.html
true
2410664366776677676
UTF-8
Loaded All Posts Not found any posts VIEW ALL Reply Cancel reply Delete By Home PAGES Contents View All RELATED CONTENTS FOR YOUR LEARNING Topic ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS PREMIUM CONTENT IS LOCKED STEP 1: Share to a social network STEP 2: Click the link on your social network Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy