On July 12, 2015, Rossow Corporation purchased 1,000 shares of Reimer Company for $30,000. The following information

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On July 12, 2015, Rossow Corporation purchased 1,000 shares of Reimer Company for $30,000. The following information applies to the share price of Reimer Company:

                                         Price
12/31/2015.......................$33
12/31/2016.......................$28
12/31/2017.........................20

Reimer Company declares and pays cash dividends of $2 per share on May 1 of each year.


Required:

1. Prepare journal entries to record the facts of the case, assuming that Reimer shares are traded on an open market.

2. Prepare journal entries to record the facts of the case, assuming that Rossow uses the equity method to account for the investment. Rossow owns 30 percent of Reimer, and Reimer reported $50,000 of net income each year.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For  book-img-for-question

Fundamentals of Financial Accounting

ISBN: 978-1259269868

5th Canadian edition

Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh

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