Question
On July 1, 2020, Williams Inc., a private enterprise, acquired 1,250 shares of Smith Ltd. for $75,000. This investment represents a 19% interest in Smith
On July 1, 2020, Williams Inc., a private enterprise, acquired 1,250 shares of Smith Ltd. for $75,000. This investment represents a 19% interest in Smith Ltd. and Williams Inc. uses the cost method to record the investment. On December 31,2020, Smith Ltd. paid a $35,000 dividend to its shareholders. At June 30, 2021, Smith Ltd.'s shares were valued at $30 per share and Smith Ltd. reported a net loss of $50,000 for the year. On September 15, 2021, Williams Inc. sold the shares for $100,000. Both Williams Inc. and Smith Ltd. have June 30, 2021 year-ends.
Required:
Prepare dated journal entries for the investment on the acquiring company's books from acquisition to disposal. Ignore income taxes. Journal entry descriptions are optional.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Sure here are the journal entries for Williams Inc July 1 2020 tex...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started