On January 1, 2020, your company purchased 8,000 shares of Another Company's $10 par common stock...

 

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On January 1, 2020, your company purchased 8,000 shares of Another Company's $10 par common stock for $18 per share in cash. On that date, Another Company's assets and liabilities had a book value equal to market value except for their building which had a market value which was $30,000 higher than its book value and had a 20-year remaining life. Other events which took place related to this investment were: 2020 a. Received $4,000 in cash dividends. b. On December 31, 2020: 1. Another Company's stock had a market value of $19 per share. 2. Another Company reported net income of $60,000. c. Received a 5% stock dividend d. On December 31, 2020: 1. Another Company's stock had a market value of $21 per share. 2. Another Company reported net income of $80,000. 2022 e. Sold 1/5 of your shares for $23.00 per share in cash INSTRUCTIONS: 1. Assuming the 8,000 shares you purchased represented less than 1% of the outstanding shares of Another Company and you plan to hold on to the shares for several years, prepare all entries for 2020 and 2021, including the original purchase on January 1, 2020, for the above information. Show how the entries in "1." above would change your net income in 2020 and in 2021. 2. 3. Show how the Investment account would be reported on the balance sheet (what section, what account(s) and what amounts) on December 31, 2020. What are the three account titles which could be used to record your purchase of BONDS of another company? 2021 On January 1, 2020, your company purchased 8,000 shares of Another Company's $10 par common stock for $18 per share in cash. On that date, Another Company's assets and liabilities had a book value equal to market value except for their building which had a market value which was $30,000 higher than its book value and had a 20-year remaining life. Other events which took place related to this investment were: 2020 a. Received $4,000 in cash dividends. b. On December 31, 2020: 1. Another Company's stock had a market value of $19 per share. 2. Another Company reported net income of $60,000. c. Received a 5% stock dividend d. On December 31, 2020: 1. Another Company's stock had a market value of $21 per share. 2. Another Company reported net income of $80,000. 2022 e. Sold 1/5 of your shares for $23.00 per share in cash INSTRUCTIONS: 1. Assuming the 8,000 shares you purchased represented less than 1% of the outstanding shares of Another Company and you plan to hold on to the shares for several years, prepare all entries for 2020 and 2021, including the original purchase on January 1, 2020, for the above information. Show how the entries in "1." above would change your net income in 2020 and in 2021. 2. 3. Show how the Investment account would be reported on the balance sheet (what section, what account(s) and what amounts) on December 31, 2020. What are the three account titles which could be used to record your purchase of BONDS of another company? 2021

Answer rating: 100% (QA)

PART 2 CHANGE IN INCOME 2020 and 2021 years business received dividend income ... View the full answer