Reference no: EM132829422

Question - Cheyenne Company has several investments in the securities of other companies. The following information regarding these investments is available at December 31, 2020.

1. Cheyenne holds bonds issued by Dorsell Corp. The bonds have an amortized cost of $314,000 and their fair value at December 31, 2020, is $390,000. Cheyenne intends to hold the bonds until they mature on December 31, 2028.

2. Cheyenne has invested idle cash in the equity securities of several publicly traded companies. Cheyenne intends to sell these securities during the first quarter of 2021, when it will need the cash to acquire seasonal inventory. These equity securities have a cost basis of $810,000 and a fair value of $925,000 at December 31, 2020.

3. Cheyenne has an ownership stake in one of the companies that supplies Cheyenne with various components Cheyenne uses in its products. Cheyenne owns 6% of the common stock of the supplier, does not have any representation on the supplier's board of directors, does not exchange any personnel with the supplier, and does not consult with the supplier on any of the supplier's operating, financial, or strategic decisions. The cost basis of the investment in the supplier is $1,205,000 and the fair value of the investment at December 31, 2020, is $1,554,000. Cheyenne does not intend to sell the investment in the foreseeable future. The supplier reported net income of $84,000 for 2020 and paid no dividends.

4. Cheyenne purchased 25% of the stock of Slobaer Co. for $891,000. Cheyenne has significant influence over the operating activities of Slobaer Co. During 2020, Slobaer Co. reported net income of $313,000 and paid a dividend of $116,000.

Required - Prepare all December 31, 2020, journal entries needed for Cheyenne relating to Cheyenne's various investments in other companies. Assume 2020 is Cheyenne's first year of operations.