Question

On June 30, 2014, Forlini Company acquired some of the 50,000 outstanding common shares of Como Corporation. The fiscal years for both companies end on December 31. The following transactions occurred during 2014:
Dec. 2 Purchased 8,000 shares of Como common stock at $ 28 per share.
Dec. 15 Como Corporation declared and paid a cash dividend of $ 2 per share.
Dec. 31 Determined that the current market price of Como stock was $ 25 per share.
Required:
1. Assume that Forlini Company purchased Como’s shares for trading purposes. Prepare the journal entries to record each of the transactions listed above.
2. Assume that Forlini Company purchased Como’s shares for inclusion in its available- for-sale portfolio. Prepare the journal entries for the same transactions above.
3. Using the following categories, indicate the effects of each transaction assuming that Como’s shares are (a) held for trading and (b) purchased as an investment of SAS.


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  • CreatedAugust 04, 2015
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