Scroll down to complete all parts of this task.

Ember Corp. purchases 20,000 shares (15%) of Stanton Industries at a price of $31/share and pays legal fees of $35,000 for the acquisition. The investment in Stanton is classified as an available for sale security, as Ember does not exercise significant influence. Stanton shows the following numbers for Year 1:

•	Dividends paid (cash): $430,000
•	Retained earnings at Declaration Date: $395,000
•	Stock ends the year with a market value of $35 per share

Ember adjusts the Investment asset account for changes in the fair values of its trading and available for sale securities.

1. The initial (acquisition) journal entry will be:

	A	B	C	D
1	Debit	Credit	Debit Amount	Credit Amount
2	Cash		$430,000
3		Dividend Income		$395,000
4		Investment in Stanton		$35,000

2. The journal entry to record the dividend will be:

	A	B	C	D
1	Debit	Credit	Debit Amount	Credit Amount
2
3
4

3. The year-end journal entry will be:

	A	B	C	D
1	Debit	Credit	Debit Amount	Credit Amount
2
3
4

4. The gain/loss from the change in value of Stanton stock will go to:

Income Statement

5. The balance in the “Investment in Stanton” account at the end of Year 1 will be:

Answer rating: 100% (QA)

Item Amount Amount Cash flows from operating activities Net income 305000 Adjustments to reconcile n... View the full answer