On January 1, 2014, Frick Company purchased 10,000 shares of the stock of Floozy, and did obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $90,000, and represents a 30% ownership stake. Floozy made $25,000 of net income in 2014, and paid dividends of $10,000. The price of Floozy\'s stock increased from $10 per share at the beginning of the year, to $12 per share at the end of the year
Requirements:
a. Prepare the January 1 & December 31 general journal entries for Frick Company.
b. How much should the Frick Company report on the balance sheet for the investment in Floozy as the end of 2014
Solution
a. Prepare the January 1 & December 31 general journal entries for Frick Company.
b. How much should the Frick Company report on the balance sheet for the investment in Floozy as the end of 2014
Frick Company report on the balance sheet for investment in Floozy as the end of 2014= $ 90000
.
On January 1- 2014- Frick Company purchased 10-000 shares of the stock.docx
1. On January 1, 2014, Frick Company purchased 10,000 shares of the stock of Floozy, and did
obtain significant influence. The investment is intended as a long-term investment. The stock
was purchased for $90,000, and represents a 30% ownership stake. Floozy made $25,000 of net
income in 2014, and paid dividends of $10,000. The price of Floozy's stock increased from $10
per share at the beginning of the year, to $12 per share at the end of the year
Requirements:
a. Prepare the January 1 & December 31 general journal entries for Frick Company.
b. How much should the Frick Company report on the balance sheet for the investment in Floozy
as the end of 2014
Solution
a. Prepare the January 1 & December 31 general journal entries for Frick Company.
b. How much should the Frick Company report on the balance sheet for the investment in Floozy
as the end of 2014
Frick Company report on the balance sheet for investment in Floozy as the end of 2014= $ 90000
Date Account Title & Explanation Debit Credit
Jan-01 Investment in Floozy 90000
Cash 90000
Dec-31 Cash 3000
Dividend 3000
