The December 31, 2016, balance sheet of FT Corporation included the following: Investments-Associated Companies at Equity ..........$15,000,000

Question:

The December 31, 2016, balance sheet of FT Corporation included the following:

Investments-Associated Companies at Equity ..........$15,000,000

Suppose the company completed the following investment transactions during 2017:

Mar. 2 Purchased 2,000 common shares as a short-term investment, paying $38.00 per share plus brokerage commission of $900. 5 Purchased additional shares in an associated company at a cost of $1,600,000. Commissions on the purchase were $30,000.

Jul. 21 Received the semi-annual cash dividend of $1.50 per share on the short-term investment purchased March 2.

Aug. 17 Received a cash dividend of $160,000 from an associated company.

Oct. 16 Sold 1,100 shares of the short-term investment (purchased on March 2) for $36.00 per share, less brokerage commission of $600.

Nov. 8 Purchased short-term investments for $310,000, plus brokerage commission of $5,000.

17 Received a cash dividend of $280,000 from an associated company. Dec. 31 Received annual reports from associated companies. Their total net income for the year was $6,900,000. Of this amount, FT's proportion is 24 percent.

Required

1. Record the transactions in the general journal of FT Corporation.

2. Post entries to the Equity Investments T-account and determine its balance at December 31, 2017.

3. Assume the beginning balance of Short-Term Investments was $104,000. Post entries to the Short-Term Investments T-account and determine its balance at December 31,

2017.

4. Assuming the market value of the short-term investment portfolio is $425,000 at December 31, 2017, show how FT Corporation would report short-term investments and investments in associated companies on the ending balance sheet. (No journal entry is required.) Use the following format:

The December 31, 2016, balance sheet of FT Corporation included
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
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Related Book For  book-img-for-question

Horngrens Accounting

ISBN: 978-0133855388

10th Canadian edition Volume 2

Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura, Carol A. Meissner, Jo Ann L. Johnston, Peter R. Norwood

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