Prepare journal entries to record the following transactions and events of Kash
ID: 2373421 • Letter: P
Question
Prepare journal entries to record the following transactions and events of Kash Company.
2011
Jan. 2
Purchased 30,000 shares of Bushtex Co. common stock for $204,000 cash plus a broker's fee of $3,480 cash. Bushtex has 90,000 shares of common stock outstanding and its policies will be significantly influenced by Kash.
Sept. 1
Bushtex declared and paid a cash dividend of $3.10 per share.
Dec. 31
Bushtex announced that net income for the year is $624,900
2012
June 1
Bushtex declared and paid a cash dividend of $3.60 per share.
Dec. 31
Bushtex announced that net income for the year is $699,750.
Dec. 31
Kash sold 10,000 shares of Bushtex for $162,500 cash.
Explanation / Answer
Hi,
Please find the answer as follows:
2011:
Jan 2
Long Term Investment - Bushtex Co Dr. 207480
Cash Cr. 207480
Sep 1
Cash Dr. (30000*3.10) 93000
Long Term Investment - Bushtex Co Cr. 93000
Dec 31
Long Term Investment - Bushtex Co Dr. (624900*30000/90000) 208300
Earnings from Long Term Investments Cr. 208300
2012:
Jun 1
Cash Dr. (30000*3.60) 108000
Long Term Investment - Bushtex Co Cr. 108000
Dec 31
Long Term Investment - Bushtex Co Dr. (699750*30000/90000) 233250
Earnings from Long Term Investments Cr. 233250
Dec 31
Cash Dr. 162500
Long Term Investment - Bushtex Co Cr. (207480*10000/90000) 69160
Gain on Investments Cr. 93340
Thanks.