Brinkley Company, which began operations on January 3, 2018, had the following transactions and events in its

Question:

Brinkley Company, which began operations on January 3, 2018, had the following transactions and events in its long-term investments.

2018

Jan. 5 Brinkley purchased 20,000 shares (25% of total) of Bloch’s common stock for $200,500.

Aug. 1 Bloch declared and paid a cash dividend of $1.05 per share.

Dec. 31 Bloch’s net income for 2018 is $82,000, and the fair value of its stock is $11.90 per share.

2019

Aug. 1 Bloch declared and paid a cash dividend of $1.35 per share.

Dec. 31 Bloch’s net income for 2019 is $78,000, and the fair value of its stock is $13.65 per share.

2020

Jan. 8 Brinkley sold 5% (equal to 1,000 shares) of its investment in Bloch for $12,025 cash.

Required

Prepare journal entries to record these transactions and events for Brinkley. Assume that Brinkley has a significant influence over Bloch with its 25% share.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... 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...

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