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QUESTION Prepare journal entries to record the purchase, the dividend received, the fair value adjustment and the selling of investment in FAITH Bhd Lotus Bhd

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Prepare journal entries to record the purchase, the dividend received, the fair value adjustment and the selling of investment in FAITH Bhd

Lotus Bhd is a manufacturing company located in Kuala Terengganu. The company supplies pharmaceutical products to several pharmacies in Malaysia. Lotus Bhd has the following transactions related to its investments during 2020 and 2021. Date Transaction 7 January 2020 Acquired RM8,000,000 of 14% bonds for RM7,600,000 with a yield of 16% market rate. The bond is held to collect contractual cash flows purpose and interest is to be received at the end of the year. 1 March 2020 Acquired 50,000 ordinary shares of FAITH Bhd at RM11.70 per share and the brokerage commission was RM6,000. Due to the foreseeable increment in the FAITH Bhd share prices, Lotus Bhd intended to sell these shares in the first quarter of 2021. 12 July 2020 Acquired 80,000 shares of MIX Bhd at RM5.50 per unit with transaction cost of RM2,000. The shares were purchased for long-term investment. 31 December 2020 Received cash dividend of RM0.40 per share for its investment in the ordinary shares of FAITH Bhd. 30 April 2021 Sold 75% of the investment in FAITH Bhd at RM471,000. Additional information: 1. At the end of 2020, the market value per share of FAITH Bhd and MIX Bhd were RM12.50 and RM6.20 respectively. 2. Lotus Bhd closes its account on 31 December every year

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