Chapter 15 Homework Stock Investment Transactions, Equity Method and Avallable-for-Sale Securities Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, Year 1. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31: Year 1 Jan 18 Purchased 6,400 shares of Malmo Inc. as an available-for-sale investment at $36 per share, including the brokerage commission July 22. A cash dividend of $0.40 per share was received on the Malmo stock. Sold 2,900 shares of Malmo Inc. stock at $40 per share less a brokerage commission Oct. 5 of $40. Dec 18. Dec 31 Received a regular cash dividend of $0.40 per share on Malmo Inc. stock. Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $33 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment Year 2 16. 10.25 . Purchased an influential interest in Helsi Co. for $680,000 by purchasing 73,500 share directly from the estate of the founder of Helsi. There are 210,000 shares of Helsi Co. stock outstanding. y 16. Received a cash dividend of $0.50 per share on Malmo Inc. stock. Doc . Received a cash dividend of $0.50 per share plus an extra dividend of $0.15 per share on Malmo Inc. stock. Dec. 31 Received $20,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $82,000 in Year 2 Glacier Products Inc. uses the equity method of accounting for its investment in Helsi Co. Dec. 91 Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $40 per share. Use the valuation allowance for available for sale investments account in making the adjustment for the increase in fair value from $33 to $40 per share. Chapter 15 Homework 1. Journalize the entries to record the preceding transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. In your computations, round per share amounts to two decimal places. Date Description Debit Creo Year 1 Jan 11 Investments Malmo Inc Cuah Sly 22 Cash Dividend devenue O. Cash Gainan Sale of Investments Investments-Malmo Inc Dec 1 Cash Dividend Revenue Dec 31 Unrealized Gain (Loss) on Availabin-for-Sale Investments Valuation Allowance for Available for Sale Investments Year 2 25 Investment in Helsi Co. Stoch Cash y 16. Cash Dividend Revenue Dec 16 Cash Dividend Revenue Dec 31-Dividends Cash Investment in Helsi Co. Stock Dec. 31-Income Investment in Helsi Co. Stock Income of Helsi Co. Dec. 31-Valuation Valuation Allowance for Available-for-Sale Investments Unrealized Gain (Loss) on Available-for-Sale Investments 2. Prepare the investment-related asset and stockholders' equity balance sheet presentation for Glacier Products Inc. on December 31, Year 2, assuming that the Retained Earnings balance on December 31, Year 2, is $496,000. Glacier Products, Inc. Balance Sheet (selected items) December 31, Year 2 Current Assets: Available-for-Sale Investments (at Cost) Plus Valuation Allowance for Available-for-Sale Investments Available for Sale Investments (at Fair Value) Investments: Investment in Helsi Co. Stock Stockholders' Equity: Retained Earnings Unrealized Gain (Loss) on Available-for-Sale Investments
