The beginning balance sheet of Segui Corporation included the following: Long-Term Investment in NEW Software (equity-method investment)..............

Question:

The beginning balance sheet of Segui Corporation included the following:

Long-Term Investment in NEW Software (equity-method investment).............. $616,000

Segui completed the following investment transactions during the year:

Mar 16 Purchase 1,600 shares of Hubbardston, Inc., common stock as a long-term available-for-sale investment, paying $12.75 per share.

May 21 Received cash dividend of $1.50 per share on the Hubbardston investment.

Aug 17 Received cash dividend of $85,000 from NEW Software.

Dec 31 Received annual reports from NEW Software, net income for the year was $500,000. Of this amount Segui s proportion is 23%.

At year-end, the fair market values of Segui s investments are: Hubbardston, $26,100; NEW, $701,000.

Requirements

1. Record the transactions in the journal of Segui Corporation.

2. Post entries to the T-account for Long-Term Investment in NEW and determine its balance at December 31.

3. Show how to report the Long-Term Available-for-Sale Investments and the Long-Term Investment in NEW accounts on Segui’s balance sheet at December 31.

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