Reference no: EM132574589
Question 1: On January 2, 2018, All Good Company purchased 10,000 shares of the stock of Big Bad Company, and DID obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $17 per share, and represents a 30% ownership stake. Big Bad Company made $450,000 of net income in 2018, and paid dividends to All Good Company of $30,000 on December 15, 2018. Big Bad Company's stock was trading on the open market for $14 per share at the end of the year. Use this information to determine the book value of the investment that should be reported at year end by All Good Company. Round to nearest whole dollar.
Question 2: Allstar Company signed a $100,000 mortgage on July 1, 2018 for the purchase of their new garage building. The mortgage entailed equal monthly payments of $2,700 at the end of each month. The interest rate is 4.0% per year. How much interest expense will be paid on August 31, 2018? (Round your answer to the nearest whole dollar.)
Question 3: On January 2, 2018, Alpaca Company purchased 14,000 shares of the stock of Zebra Company, and did not obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $12 per share, and represents a 10% ownership stake. Zebra Company made $55,000 of net income in 2018, and paid dividends of 50 cents per share on December 15, 2018. On December 31, 2018, Zebra Company's stock was trading on the open market for $15 per share at the end of the year. Use this information to prepare the General Journal entry(ies) (without explanation) for January 2 purchase and the December 15 & 31, 2018 record of income & gain/loss. If no entry is required then write "No Entry Required."
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