BLEM 2-investments (au points) Part 1-Equity Trading Securities Portfolio (15 points) Holiday Kitchens, Inc. had the following trading securities portfolio at January 1, 2014. Cranberry Company 5,000 shares @ $20 each 8,000 shares @ $17 each 6,000 shares @ $21 each $100,000 Eggnog Industries 136,000 126,000 362,000 Cinnamon Corporation Trading securities at cost Securities fair value adjustment 24,000 Trading securities at fair value $386,000 During 2014, the following transactions took place: On February 16, Cranberry declared and paid a $.75 per share cash dividend. . On May 22, Holiday Kitchens sold 4,000 shares of Eggnog for $16 per share, less brokerage commission, taxes and fees of $1,640. On August 24, Holiday Kitchens purchased 2,500 shares of Nutmeg Corporation for $16.50 per share plus brokerage commission of $125 . At December 31, 2014, the stocks had the following price per share values: Cranberry . $21; Eggnog $15; Cinnamon $19; and Nutmeg $17. part 2 - Equity Method (10 points) As a long-terminvestment, Holiday Kitchens, Inc purchased 40% of Cocoa Corporation Inc.'s 400,000 shares for $640,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of Cocoa's net assets were equal. During the year, Cocoa earned net income of $650,000 and distributed cash dividends of 35 cents per share. At year-end, the fair value of the shares is $680,000. QUESTION Prepare the appropriate journal entries from the purchase through the end of the year using the equity method for investments. If no journal entry is necessary, write 'NA. Credit Event Journal Entry Debit Purchase PROBLEM 2, continued Part 3 -Investment in Bonds (15 points) Frosty Corporation purchased as a long-term investment $150 million of 6% bonds, date January 1, on January 1, 2018. Management has the positive bonds until maturity. For bonds of similar risk and maturity the market yield was896. paid for the bonds was $133 million. Interest is received semiannually on June 30 an intent and ability to hold the The price nging market conditions, the fair value of the bonds at December 31, Prepare journal entries for the bonds on the following dates. December 31. Due to cha 2018, was $140 million. January 1, 2018 on67 BLEM 2-investments (au points) Part 1-Equity Trading Securities Portfolio (15 points) Holiday Kitchens, Inc. had the following trading securities portfolio at January 1, 2014. Cranberry Company 5,000 shares @ $20 each 8,000 shares @ $17 each 6,000 shares @ $21 each $100,000 Eggnog Industries 136,000 126,000 362,000 Cinnamon Corporation Trading securities at cost Securities fair value adjustment 24,000 Trading securities at fair value $386,000 During 2014, the following transactions took place: On February 16, Cranberry declared and paid a $.75 per share cash dividend. . On May 22, Holiday Kitchens sold 4,000 shares of Eggnog for $16 per share, less brokerage commission, taxes and fees of $1,640. On August 24, Holiday Kitchens purchased 2,500 shares of Nutmeg Corporation for $16.50 per share plus brokerage commission of $125 . At December 31, 2014, the stocks had the following price per share values: Cranberry . $21; Eggnog $15; Cinnamon $19; and Nutmeg $17. part 2 - Equity Method (10 points) As a long-terminvestment, Holiday Kitchens, Inc purchased 40% of Cocoa Corporation Inc.'s 400,000 shares for $640,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of Cocoa's net assets were equal. During the year, Cocoa earned net income of $650,000 and distributed cash dividends of 35 cents per share. At year-end, the fair value of the shares is $680,000. QUESTION Prepare the appropriate journal entries from the purchase through the end of the year using the equity method for investments. If no journal entry is necessary, write 'NA. Credit Event Journal Entry Debit Purchase PROBLEM 2, continued Part 3 -Investment in Bonds (15 points) Frosty Corporation purchased as a long-term investment $150 million of 6% bonds, date January 1, on January 1, 2018. Management has the positive bonds until maturity. For bonds of similar risk and maturity the market yield was896. paid for the bonds was $133 million. Interest is received semiannually on June 30 an intent and ability to hold the The price nging market conditions, the fair value of the bonds at December 31, Prepare journal entries for the bonds on the following dates. December 31. Due to cha 2018, was $140 million. January 1, 2018 on67