Captain Ivestments compleled the following transaclions duing 2016 (Click tha ic
ID: 2563846 • Letter: C
Question
Captain Ivestments compleled the following transaclions duing 2016 (Click tha icon to view the transactions) Journalize 2. 1. Captain's transactions. Explanations are not required Classify and prepara partial financial statements for Captain's 25% TRChnomita investment far the year anded December 31 2016 iequirement 1. Journalize aptain's rensections. Explanations are not equired ecord debits ist, he credts xclude explanations om o mal entries. no entry is required. select "No ent y required" 0 he Jan. 14 Purchased 850 shares of Techno te stock paying S43 per share. The investment represents 25% ownership in Technomite's voting stock. Captain intends to hold the investment for the indefinite future st nethe Accounts column and eave the en aining cells biark Date Debit Credil More Into Jan. 14 Long-Term Investments Technomite 36550 Cash Jan. 14 Purchasad 350 shr of Tachnomite stock, paying S43 par share. The investment represents 25% ownership in Technomite's voting stock Captain intends to hold the investmant for the indefinite future Aug. 22: Recelved a cash dividend of S0.28 per share on the Technomite stock. Aug. 22 Received a cash dividend of 50.28 per share on the Technomite stock Der 31 Technomita's currant marknt value is $40 par share Technomits reported net Income of $120,000 for the year ended 2016 Date Credit 31 Aug. 22 PrintDone Dec. 31: Technomite's curent market value ls $40 per share Date Debit CreditExplanation / Answer
Captain Investment
Balance Sheet (Partial)
December 31,2016
Captain Investment
Income Statement (Partial)
For the Year Ended December 31,2016
Notes :
1. The Carrying amount of the Investment is Technomite should be calculated as :
= Cost of Investment + Share of post Acquisition Net Income - Dividend Income Received
= 36,550 + (120,000 * 25%) - (850 * 0.28)
= 36,550 + 30,000 - 238
= $66,312
Date Accounts Debit Credit Jan.14,2016 Long Term Investments - Technomite Dr. 36,550 To Cash 36,550 (Being 850 shares of technomite acquired in cash @ 43 per share) Aug.22,2016 Cash Dr. 238 To Long Term Investment - Technomite 238 (Being cash dividend recived for 850 shares @ 0.28 per share adjusted against aquisition cost of stock) December 31,2016 No entry required December 31,2016 Long Term investments - Technomite Dr. 30,000 To Technomite's Share of earnings 30,000 (Being 25% of the Technomite's Income taken into consideration and the Carrying value of investment adjusted accordingly - See Note Below)