Business, 13.03.2020 02:32 jorgereyes01
Daffitar Inc. produces and sells theater set designs and costumes. The company began operations on January 1, 2014. The following transactions relate to securities acquired by Daffitar Inc., which has a fiscal year ending on December 31:
2014
Feb. 1. Purchased 12,000 shares of Acuity Inc. as available-for-sale security at $27 per share, including the brokerage commission.
Mar. 18. Received a cash dividend of $0.18 per share on Acuity Inc. stock.
Sept.12. A cash dividend of $0.24 per share was received on the Acuity stock.
28. Sold 1,000 shares of Acuity Inc. stock at $21 per share, less a brokerage commission of $50.
Dec. 31. Acuity Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $33 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment.
2015
Jan. 23. Purchased an influential interest in Shouse Inc. for $376,000 by purchasing 70,000 shares directly from the estate of the founder of Shouse Inc. There are 250,000 shares of Shouse Inc. stock outstanding.
Mar. 16. Received a cash dividend of $0.24 per share on Acuity Inc. stock.
Sept.16. Received a cash dividend of $0.24 per share plus an extra dividend of $0.06 per share on Acuity Inc. stock.
Dec. 31. Received $30,100 of cash dividends on Shouse Inc. stock. Shouse Inc. reported net income of $190,000 in 2015. Daffitar Inc. uses the equity method of accounting for its investment in Shouse Inc.
31. Acuity Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $30 per share. Use the valuation allowance for available-for sale investments account in making the adjustment for the decrease in fair value from $33 to $30 per share.
Instructions:
1. Journalize the entries to record these transactions.
2. Prepare the investment-related asset and stockholders’ equity balance sheet presentation for Forte Inc. on December 31, Year 2, assuming the Retained Earnings balance on December 31, Year 2, is $440,000.
Refer to the Chart of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. "Less" or "Plus" will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
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Daffitar Inc. produces and sells theater set designs and costumes. The company began operations on J...
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