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Question 1: Kind Company has the following securities in its portfolio of equity securities on December 31, 2021: Cost Fair Value 5,000 shares of Tim
Question 1: Kind Company has the following securities in its portfolio of equity securities on December 31, 2021: Cost Fair Value 5,000 shares of Tim Corp., Common $151,000 $139,000 10,000 shares of Great, Common 184,000 190,000 $335,000 $329,000 All of the securities had been purchased in 2021. In 2022, Kind completed the following securities transactions: March 1 Sold 5,000 shares of Tim Corp., Common @ $32 less fees of $1,500. Bought 600 shares of Fair Stores, Common @ $45 plus fees of $550. April 1 The Kind Company portfolio of equity securities appeared as follows on December 31, 2022: Cost $184,000 10,000 shares of Great, Common 600 shares of Fair Stores, Common Fair Value $195,500 25,500 $221,000 27.550 $211,550 Instructions Prepare the general journal entries for Kind Company for: (a) the 2021 adjusting entry. (b) the sale of the Tim Corp. stock. (c) the purchase of the Fair Stores' stock. (d) the 2022 adjusting entry. Question 2: Rich, Inc. acquired 40% of Doane Corporation's voting stock on January 1, 2021 for $1,200,000. During 2021, Doane earned $400,000 and paid dividends of $250,000. Rich's 30% interest in Doane gives Rich the ability to exercise significant influence over Doane's operating and financial policies. During 2022, Doane earned $600,000 and paid cash dividends of $200,000 on April 1 and $150,000 on October 1. On July 1, 2022, Rich sold half of its stock in Doane for $660,000 cash. a. Before income taxes, what amount should Rich include in its 2021 income statement as a result of the investment? b. What should be the carrying amount of this investment in Rich's December 31, 2021 balance sheet? c. What should the gain be on sale of this investment Rich's 2022 income statement
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