Accounting Question (Question 9)

Instructions: Refer to Question 9.png below, use the list of accounts provided below for the journal entry accounts

List of Accounts

• Accumulated Other Comprehensive Income
• Allowance for Investment Impairment
• Bond Investment at Amortized Cost
• Cash
• Dividend Receivable
• Dividend Revenue
• FV-NI Investments
• FV-OCI Investments
• Gain on Sale of Investments
• GST Receivable
• Interest Expense
• Interest Income
• Interest Payable
• Interest Receivable
• Investment in Associate
• Investment Income or Loss
• Loss on Discontinued Operations
• Loss on Impairment
• Loss on Sale of Investments
• No Entry
• Note Investment at Amortized Cost
• Other Investments
• Recovery of Loss from Impairment
• Retained Earnings
• Unrealized Gain or Loss - OCI

Question 9.png

On August 1, 2020, Swifty Corporation purchased 20% of the outstanding voting shares in WLT Corporation for $1,270,000. At the time of purchase, WLT's net assets were undervalued by $70,900 and had a remaining useful life of 12 years. Both companies had a December 31 year-end. At the end of 2020, WLT reported a net income of $330,000. Also, on December 31, 2020, the fair value of the investment in WLT shares was $1,393,000. On January 10, 2021, WLT paid a cash dividend. Swifty's ownership entitles it to $20,200 of the dividend. Prepare the journal entries on the books of Swifty Corporation to record the transactions described above, assuming that the 20% interest in WLT does not represent significant influence, and that Swifty elected to account for its investment following the fair value through net income (FV-NI) model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit