Selk Steel Co , which began operations on January 4, 2017, had the following subsequent transactions and events in its long term investments 2017 Jan 5 Selk purchased 80,000 shares (30 of total) of Kildaire's common stock for $1,200,000 Oct 23 Kildaire declared and paid a cash dividend of $4 80 per share Dec 31 Kildaire's net income for 2017 is $1,324,000, and the fair value of its stock at December 31 is $22 00 per share 2018 Oct 15 Kildaire declared and paid a cash dividend of $3 70 per share Dec 31 Kildaire's net income for 2018 is $1,636,000, and the fair value of its stock at December 31 is $25 00 per share 2019 Jan 2 Selk sold all of its investment in Kildaire for $1,500,000 cash Part 2 Assume that although Selk owns 30 of Kildaires outstanding stock, circumstances indicate that it does not have a significant influence over the investee and that it is classified as an available for sale security investment Required 1 Prepare journal entries to record the preceding transactions and events for Selk Also prepare an entry dated January 2, 2019, to remove any balance related to the fair value adjustment (If no entry is required for a transaction event, select No journal entry required in the first account field ) Selk purchased 80,000 shares (30 of total) of Kildaire's common stock for $1,200,000 Note Enter debits before credits Date General Journal Debit Credit Jan 05, 2017 Kildaire declared and paid a cash dividend of $4 80 per share Note Enter debits before credits Date General Journal Debit Credit Oct 23, 2017 Kildaire's net income for 2017 is $1,324,000, and the fair value of its stock at December 31 is $22 00 per share Note Enter debits before credits Date General Journal Debit Credit Dec 31, 2017 Kildaire declared and paid a cash dividend of $3 70 per share Note Enter debits before credits Date General Journal Debit Credit Oct 15, 2018 Kildaire's net income for 2018 is $1,636,000, and the fair value of its stock at December 31 is $25 00 per share Note Enter debits before credits Date General Journal Debit Credit Dec 31, 2018 Selk sold all of its investment in Kildaire for $1,500,000 cash Note Enter debits before credits Date General Journal Debit Credit Jan 02, 2019 Remove any balance related to the fair value adjustment Note Enter debits before credits Date General Journal Debit Credit Jan 02, 2019 2 Compute the cost per share of Selks investment in Kildaire common stock as reflected in the investment account on January 1, 2019 Investment cost per share 3 Compute the net increase or decrease in Selks equity from January 5, 2017, through January 2, 2019, resulting from its investment in Kildaire The in Selks equity is

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 06, 2024

Selk Steel Co., which began operations on January 4, 2017, had the following subsequent transactions and events in its long-term investments. 2017 Jan. 5 Selk

Selk Steel Co., which began operations on January 4, 2017, had the following subsequent transactions and events in its long-term investments. 2017

Jan.	5	Selk purchased 80,000 shares (30% of total) of Kildaire's common stock for $1,200,000.
Oct.	23	Kildaire declared and paid a cash dividend of $4.80 per share.
Dec.	31	Kildaire's net income for 2017 is $1,324,000, and the fair value of its stock at December 31 is $22.00 per share.

2018

Oct.		15		Kildaire declared and paid a cash dividend of $3.70 per share.
Dec.		31		Kildaire's net income for 2018 is $1,636,000, and the fair value of its stock at December 31 is $25.00 per share.

2019

Jan.

Selk sold all of its investment in Kildaire for $1,500,000 cash.

Part 2 Assume that although Selk owns 30% of Kildaires outstanding stock, circumstances indicate that it does not have a significant influence over the investee and that it is classified as an available-for-sale security investment. Required: 1. Prepare journal entries to record the preceding transactions and events for Selk. Also prepare an entry dated January 2, 2019, to remove any balance related to the fair value adjustment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Selk purchased 80,000 shares (30% of total) of Kildaire's common stock for $1,200,000.

Note: Enter debits before credits.