Question
1)Gonzalez Company acquired $168,600 of Walker Co., 7% bonds on May 1 at their face amount. Interest is paid semiannually on May 1 and November
1)Gonzalez Company acquired $168,600 of Walker Co., 7% bonds on May 1 at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, Gonzalez Company sold $55,200 of the bonds for 99.
Journalize entries to record the following in Year 1:
For a compound transaction, if an amount box does not require an entry, leave it blank.
a. The initial acquisition of the bonds on May 1.
May 1 | |||
b. The semiannual interest received on November 1.
Nov. 1 | |||
c. The sale of the bonds on November 1.
Nov. 1 | |||
d. The accrual of $1,323 interest on December 31.
Dec. 31 | |||
2)On January 4, Year 1, Ferguson Company purchased 87,500 shares of Silva Company directly from one of the founders for a price of $46 per share. Silva has 350,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $236,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $803,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva.
a. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1.
Year 1, Jan. 4 | |||
Year 1, July 2 | |||
Year 1, Dec. 31 | |||
b. Determine the December 31, Year 1, balance of Investment in Silva Company Stock. $
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