Refer to the transactions in Problem C-4A. Assume that although Selk owns 20% of Kildaires outstanding stock,

Question:

Refer to the transactions in Problem C-4A. Assume that although Selk owns 20% of Kildaire’s outstanding stock, circumstances indicate that it does not have a significant influence over the investee.

2018

Jan. 5 Selk purchased 60,000 shares (20% of total) of Kildaire’s common stock for $1,560,000.

Oct. 23 Kildaire declared and paid a cash dividend of $3.20 per share.

Dec. 31 Kildaire’s net income for 2018 is $1,164,000 and the fair value of its stock at December 31 is $30.00 per share.

2019

Oct. 15 Kildaire declared and paid a cash dividend of $2.60 per share.

Dec. 31 Kildaire’s net income for 2019 is $1,476,000 and the fair value of its stock at December 31 is $32.00 per share.

2020

Jan. 2 Selk sold 3% (equal to 1,800 shares) of its investment in Kildaire for $54,200 cash.

Required

Prepare journal entries to record the preceding transactions and events for Selk.

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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