(L02) Fairbanks Corporation purchased 400 shares of Sherman Inc. common stock for $13,200 (Fairbanks does not have...
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(L02) Fairbanks Corporation purchased 400 shares of Sherman Inc. common stock for $13,200 (Fairbanks does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $34.50 per share. Prepare Fairbanks’ journal entries to record
(a) the purchase of the investment,
(b) the dividends received, and
(c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.)
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