1. Sol Corporation acquired 5% of the 200,000 outstanding ordinary shares of K Electronics at a cost of $30 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 $33 per share. This investment is classified as trading

(a) Please prepare all necessary journal entries for 2020 transaction above

(b) Please describe how Sol Corporation will report the

(1) investment on the balance sheet

(2) income and unrealized gain on its 2020 financial statements

(c) On January 5, 2021, the company sold the investment in K Electronics at $35 per share. On Dec 20, 2021, Company acquired 1,000 shares of Apple Company ordinary shares at $120 per share for trading. On December 31, 2021, Apple stock was closed at $135 per share.

(1) Please prepare 2021 journal entries for above transactions.

(2) Please describe how the company will report the investment on the balance sheet

2. If the investment in K Electronics is classified as non-trading, Please prepare all necessary journal entries for 2020 and describe how Sol Corporation will report the investment, income and unrealized gain on its 2020 financial statements

3. 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 $20 per share on January 1, 2020. On June 15, K Corp declared and paid a cash dividend of $2 per share. 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