Selk Steel Co., which began operations on January 4, 2018, had the following transactions and events in

Question:

Selk Steel Co., which began operations on January 4, 2018, had the following transactions and events in its long-term investments.

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 these transactions and events for Selk. Assume that Selk has a significant influence over Kildaire with its 20% share of stock.

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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