User Account

All Pages

Prepare Pearl Corporation journal entries for the investment

Assignment Help Financial Accounting
Reference no: EM132756449

Question - On January 1, 2021, Pearl Corporation acquired 15,000 common shares of Sapphire Company for $85 each. At the time, Sapphire had 100,000 common shares outstanding. The investment was classified as FV-NI. During 2021, Sapphire reported net income of $525,000 and declared and paid dividends of $30,000. At the end of 2021, the fair value of Sapphire's shares was $86 per share.

a) Prepare Pearl Corporation's journal entries for the investment in Sapphire for the 2021 fiscal year.

On January 1, 2022, Pearl Corporation acquired another 7,000 common shares of Sapphire Company for $86 each. The book values of Sapphire's net assets were equal to fair values except for specialized equipment, which was understated by $30,000. The equipment had an estimated remaining life of 15 years. During 2022, Sapphire reported net income of $560,000 and paid dividends of $32,000. At December 31, 2022, the fair value of Sapphire's shares was $94 per share.

b) Prepare the journal entries on the books of Pearl Corporation for the investment in Sapphire for the 2022 fiscal year.

On January 1, 2023, Pearl Corporation acquired another 18,000 common shares of Sapphire Company for $94 per share. The book values of Sapphire's net assets were equal to fair values except for specialized equipment, which was now understated by $31,500 and had an estimated remaining useful life of 14 years. During 2023, Sapphire Company reported a net income of $580,000 and paid dividends of $33,000. At December 31, 2023, the fair value of Sapphire's shares was $98 per share.

c) Prepare the journal entries on the books of Pearl Corporation for the investment in Sapphire for the 2023 fiscal year.

On January 1, 2024, Pearl Corporation acquired another 20,000 common shares of Sapphire Company for $98 each. The book values of Sapphire's net assets were equal to fair values except for specialized equipment, which was now understated by $28,000 and had an estimated remaining useful life of 12 years. During 2024, Sapphire Company reported a net income of $520,000 and paid dividends of $28,000. At December 31, 2024, the fair value of Sapphire's shares was $94 per share.

d) Prepare the journal entries on the books of Pearl Corporation for the investment in Sapphire for the 2024 fiscal year.

On January 1, 2025, Pearl Corporation sold 3,000 shares of Sapphire Company for $94 per share. On the date of the sale, Pearl showed a balance of $8,500 in its contributed surplus account.

e) Prepare the journal entry on the books of Pearl Corporation to record the sale of the shares in Sapphire.

Reference no: EM132756449

Questions Cloud

Find what total amount credited to the capital account : Earnings for the period total $51,000. What will be the total amount credited to the Capital account of partner C when the Income Summary account is closed?
Identify three care strategies that you would use : Anna is a 45-year-old female that presented to her physician's office for her annual check-up. Anna has a history of diabetes, obesity, and noncompliance.
What will be amount credited to capital account of partner : Earnings for the period total $39,000. What will be the amount credited to the Capital account of partner A when the books are closed?
Which is not a condition of a limited partnership : Which is NOT a condition of a limited partnership? Limited partners are expected to have an active role in management. / Limited partnerships will have more
Prepare Pearl Corporation journal entries for the investment : Sapphire reported net income of $525,000. Prepare Pearl Corporation's journal entries for the investment in Sapphire for the 2021 fiscal year
Find how much cash should be distributed to a : How much cash should be distributed to A?A and B are partners who share income in the ratio of 3:2 and have capital balances of $50,000 and $90,000 at the time.
Post a brief explanation of self-harming behaviors : Post a brief explanation of self-harming behaviors that Dalia is exhibiting. Describe theoretical approaches and practical skills you would employ in working.
What amount of loss on realization should be allocated to a : After all noncash assets are sold and all liabilities are paid, there is a cash balance of $80,000. What amount of loss on realization should be allocated to A?
What is ollie capital balance after admitting ray : Ray is admitted to the partnership and is given a 10% interest by investing $20,000. What is Ollie's capital balance after admitting Ray?

Reviews

Write a Review

Financial Accounting Questions & Answers

  What will the free cash flows for this project

The firm's marginal tax rate is 40 percent. What will the free cash flows for this project be in Year Year Year 2 and Year 3

  Operating expenses associated with the old machines

Hip Duds Company is considering the purchase of new machines on January 1, 2015. Trail Power has been using the same machines to make its name brand clothing for the last five years. A cost efficiency consultant has suggested that production costs ma..

  Calculate the product price using a fixed manufacturing

Calculate the product price using a fixed manufacturing overhead rate by department calculated using the average department activity.

  What was the budgeted receivables balance

Verna's makes all sales on account, subject to the following collection pattern: 30% are collected in the month of sale; 60% are collected in the first month after sale; and 10% are collected in the second month after sale. If sales for October, Nove..

  Identify and explain the two main types of market research

Comment upon the results with the 2 different transfer prices and on the motivational impact on the two divisional managers

  Purpose a production budget for playclay

Purpose a production budget for Playclay for the months July, August, September, and October and Materials purchase Budget For the quarter from the data given below

  Using the LIFO inventory valuation method

Lawrence owns a small candy store that sells one type of candy. His beginning inventory of candy was made up of 10,000 boxes costing $1.50 per box ($15,000), and he made the following purchases of candy during the year: Calculate Lawrence's ending in..

  Record the transaction in the books of the lessee

Record the transaction in the books of the lessee. Beginning December 30, 2019, JJI entered into a contract with Carlin's Inc. for the use

  Edit a worksheet that summarizes the inventory of bulbs

Project Description: In the following project, you will edit a worksheet that summarizes the inventory of bulbs and trees at the Pasadena facility.

  Descriptions of the journal entry and account numbers

The following account balances in the unadjusted trial balance at September 30, 2016 are presented below: Prepaid insurance $2,700, Unearned commissions revenue 500. Prepare the adjusting entries at December 31, 2016. Descriptions of the journal entr..

  Complete cash flow statement using the indirect method

Prepare a complete cash flow statement using the indirect method for the 2010 fiscal year and compute the amounts - Cash collected from clients during the year

  Analyze the transaction using the accounting equation

Post the entry using T-accounts to represent ledger accounts. Analyze the transaction using accounting equation. Record the transaction in journal entry form.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd