Assessing Financial Statement Effects of Equity Method Securities

Use the financial statement effects template to record the following transactions involving investments in marketable securities accounted for using the equity method. a. Purchased 12,000 common shares of Bakersfield Co. at $12 per share; the shares represent 30% ownership in Bakersfield. b. Received a cash dividend of $2.00 per common share from Bakersfield. c. Bakersfield reported annual net income of $123,000. d. Sold all 12,000 common shares of Bakersfield for $159,000. Use negative signs with answers, if appropriate.

				Balance Sheet								Income Statement
			Noncash				Contrib.		Earned
Transaction	Cash Asset	+	Assets	=	Liabilities	+	Captial	+	Capital		Revenues	-	Expenses	=	Net income
a. Purchased shares of Bakersfield.	Answer		Answer		Answer		Answer		Answer		Answer		Answer		Answer
b. Received cash dividend from Bakersfield.	Answer		Answer		Answer		Answer		Answer		Answer		Answer		Answer
c. Bakersfield reported annual net income.	Answer		Answer		Answer		Answer		Answer		Answer		Answer		Answer
d. Sold all Bakersfield shares.	Answer		Answer		Answer		Answer		Answer		Answer		Answer		Answer