Reference no: EM131971954
Problem
Roman Products, Inc., is a wholesaler of men's hair products. The company began operations on January 1, 2014. The following transactions relate to securities acquired by Roman Products, Inc., which has a fiscal year ending on December 31:
2014
Jan. 3 Purchased 8,800 shares of Whalen Inc. as an available-for-sale security at $48 per share, including the brokerage commission.
July 8 Received a cash dividend of $0.40 per share on the Whalen stock.
Oct. 19 Sold 2,600 shares of Whalen Inc. stock at $53 per share, less a brokerage commission of $60.
Dec. 12 A cash dividend of $0.40 per share was received on the Whalen stock.
Dec. 31 Whalen Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $45 per share.
Use the valuation allowance for available-for-sale investments account in making the adjustment.
2015
Jan. 5 Purchased an influential interest in Tasmania Inc. for $600,000 by purchasing 59,500 shares directly from the estate of the founder of Tasmania Inc. There are 170,000 shares of Tasmania Inc. stock outstanding.
July 9 Received a cash dividend of $0.50 per share on Whalen Inc. stock.
Dec. 8 Received a cash dividend of $0.50 per share plus an extra dividend of $0.10 per share on Whalen Inc. stock.
Dec. 31 Received $18,000 of cash dividends on Tasmania Inc. stock. Tasmania Inc. reported net income of $74,000 in 2015.
Roman Products uses the equity method of accounting for its investment in Tasmania Inc.
Dec. 31 Whalen Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $52 per share. Use the valuation
allowance for available-for-sale investments account in making the adjustment for the change in fair value from $45 to $52 per share.
Required:
1. Journalize the entries to record the preceding transactions. For a compound transaction, if an amount box does not require an entry, leave it blank.
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