What is the total effect on net income

Assignment Help Accounting Basics

Reference no: EM131983439

Problem

Stock Investments. During 2016, Stockman Company began investing in the common stock of other companies. Journalize the following activities using the appropriate account titles. For any accounts that would affect the income statement, indicate (I/S) next to the account title; for any accounts that would affect Other Comprehensive Income indicate (OCI) next to the account title.

1. In January, Stockman purchased 4,000 shares of the outstanding stock of Edgar Company (this represented a 40% investment in Edgar Company) at a price of $18 per share.

2. In February, Stockman purchased 1,000 shares of the outstanding stock of Archer Company for $12 per share. This investment was classified as Available-for-sale.

3. In March, Stockman purchased 2,000 shares of the outstanding stock of Turner Company for $20 per share. This investment was classified as a Trading investment.

4. In April, Edgar Company declared and paid a total cash dividend of $30,000 to its owners.

5. In May, Archer Company paid a $1 per share dividend to its owners.

6. On December 31, each of these companies reported net income to their owners in the following amounts:

Edgar, $80,000 net income

Archer, $50,000 net income

Turner, $100,000 net income

7. At December 31, the following per share amounts were reported for each of Stockman's investments:

Edgar Company $25 per share

Archer Company $16 per share

Turner Company $18 per share

8. What is the total effect (note amount and direction) on net income from the previous journal entries?

9. What is the total effect (note amount and direction) on other comprehensive income from the previous journal entries?

Reference no: EM131983439

Questions Cloud

Making a major fdi : Your company, headquartered in the Philippines, is considering making a major FDI in China. This planned acquisition will be your company's first investment

What amount of gain is recognized by mulberry corporation : What amount of gain or loss is recognized by Mulberry Corporation and by Anar with respect to the distribution of the land?

What were the main causes of the difficulties with project : McAfee believes that this kind of innovation will lead to creating new jobs that involve more than enhancing creativity.

Where in finance would apr or ear concepts apply : Where in finance would APR or EAR concepts apply? How do they apply to the Time Value of Money concepts we are covering this week?

What is the total effect on net income : What is the total effect on net income from the previous journal entries? What is the total effect on other comprehensive income from previous journal entries?

Describe the case situation -structure of the organization : The case study presented in Case 4 is about the South Australian Water company trying to align information technology in a publically owned organization.

Can a firm show a positive net income and still be in danger : Can a firm show a positive net income and still be in danger? Discuss the relevance of traditional financial statements to the health of a firm

What is the forward exchange rate of swedish : If the interest parity holds, what is the forward exchange rate of Swedish krona per U.S. dollar? Round your answer to 2 decimal places.

What value of the required return does the analyst assume : A stock analyst assumes that a stock will not pay its first dividend until 12 years from today. What value of the required return does the analyst assume?

User Account

All Pages