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Outstanding common stock of kennedy company

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Reference no: EM13487588

On January 10, 2011, Delta Corporation acquired 12,000 shares of the outstanding common stock of Kennedy Company for $600,000. At the time of purchase, Kennedy Company had outstanding 48,000 shares with a book value of $2.4 million. On December 31, 2011, the following events took place:

(a) Kennedy reported net income of $160,000 for the calendar year 2011.

(b) Delta received from Kennedy a dividend of $0.55 per share of common stock.

(c) The fair value of Kennedy Company stock had temporarily declined to $44 per share.

Give the entries that would be required to reflect the purchase and subsequent events on the books of Delta Corporation, assuming that

(1) The security is classified as available for sale and

(2) The equity method is appropriate.

Reference no: EM13487588

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