Novak Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31,...
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Novak Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,097,800 for 49,900 shares. Kulikowski Inc. declared and paid an $0.85 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $769,000 for 2021. The fair value of Kulikowski's stock was $25 per share at December 31, 2021. (a) Prepare the journal entries for Novak Inc. for 2020 and 2021, assuming that Novak cannot exercise significant influence over Kulikowski. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) ate 2020 ,2021 Your answer is correct. 2021 V Account Titles and Explanation Equity Investments Cash cash Dividend Revenue Cash Dividend Revenue (To record dividend.) Fair Value Adjustment Unrealized Holding Gain or Loss - Income (To record fair value.) Debit 1097800 42415 42415 149700 Credit 1097800 42415 42415 A 149700 (b) Prepare the journal entries for Novak Inc. for 2020 and 2021, assuming that Novak can exercise significant influence over Kulikowski. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Dec. 31, 2020 June 30, 2021 Dec. 31, 2021 Account Titles and Explanation T (To record dividend.) (To record revenue.) Debit Credit Novak Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,097,800 for 49,900 shares. Kulikowski Inc. declared and paid an $0.85 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $769,000 for 2021. The fair value of Kulikowski's stock was $25 per share at December 31, 2021. (a) Prepare the journal entries for Novak Inc. for 2020 and 2021, assuming that Novak cannot exercise significant influence over Kulikowski. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) ate 2020 ,2021 Your answer is correct. 2021 V Account Titles and Explanation Equity Investments Cash cash Dividend Revenue Cash Dividend Revenue (To record dividend.) Fair Value Adjustment Unrealized Holding Gain or Loss - Income (To record fair value.) Debit 1097800 42415 42415 149700 Credit 1097800 42415 42415 A 149700 (b) Prepare the journal entries for Novak Inc. for 2020 and 2021, assuming that Novak can exercise significant influence over Kulikowski. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Dec. 31, 2020 June 30, 2021 Dec. 31, 2021 Account Titles and Explanation T (To record dividend.) (To record revenue.) Debit Credit
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Date December 312020 Account Titles and Explanation Investment in Theresa Kuli... View the full answer
Related Book For
Concepts in Federal Taxation
ISBN: 9780324379556
19th Edition
Authors: Kevin E. Murphy, Mark Higgins, Tonya K. Flesher
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