1. Sol Corporation acquired 10% of the 100,000 outstanding ordinary shares of K Electronics at a cost of $15 per share on Dec 1, 2020. On December 30, K Electronics declared and paid a $100,000 dividend. On December 31, K Electronics reported net income of $300,000 for the year. At December 31, the market price of K Electronics was $18 per share. This investment is classified as “trading”

1. Please prepare all necessary journal entries for 2020 transaction above

2. Please describe how Sol Corporation will report the investment, income and unrealized gain on its 2020 financial statements

3. On January 5, 2021, the company sold the investment in K Electronics at $19 per share. On Dec 20, 2021, Company acquired 1,000 shares of IBM ordinary shares at $80 per share for “trading”. On December 31, 2021, IBM stock was closed at $78 per share.

Please prepare journal entries for 2021.

2. Sol Inc., obtained significant influence over K Corp by acquiring 30% of K Corp's 100,000 outstanding ordinary shares at a total cost of $10 per share on January 1, 2020. On June 15, K Corp declared and paid a cash dividend of $50,000. On December 31, K Corp. reported a net income of $300,000 for the year.

Instructions

Prepare all the necessary journal entries for 2020 for Sol Inc and compute the balance in the investment account in K Corp on December 31, 2020

Answer rating: 100% (QA)

Solution Sol Corporation acquisition of K Electronics Dec 1 2020 Trading Securities150000 Cash150000 To record the acquisition of K Electronics ordinary shares classified as trading Dec 30 2020 Cash10... View the full answer