Trading security, Accounting Basics

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Glaser Services obtained 30% of the outstanding common stock of Nickels Company on January 1, 2008, by paying $864,180 for the 48,010 shares. Nickels stated and paid $0.50 per share cash dividends on March 15, June 15, September 15, and December 15, 2008. Nickels reported net income of $337,500 for the year. At December 31, 2008, the market price of Nickels common stock was $26 / share.

First part:

Organize the journal entries for Glaser Services for 2008 assuming Glaser cannot use significant influence over Nickels. (Use the cost method and assume that Nickels common stock should be classified as a trading security.

Second part:

Organize the journal entries for Glaser Services for 2008, assuming Glaser can exercise significant influence over Nickels. Use the equity method.

 


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