ACCT 221 Quiz 1 PROBLEM 2
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On January 2, 2016, Alpha
Company purchased 25,000 shares of Bravo Company stock on the open market for
$50 per share as a long-term investment. On both June 15 and December 15, Bravo
Company paid $50,000 in dividends for a total annual dividend of $100,000. On
December 31, Bravo Company reported net income of $400,000 and the stock had a
market value of $75 per share. Both Alpha and Bravo operate on a calendar year.
Part A – Assume that at all
times during the year there were 250,000 shares of Bravo Company stock
outstanding.
Record the journal entries
for the purchase of the stock, the dividends, and the reporting of income at
year end on Alpha Company books.
State what the year-end
value of the stock investment account is on the Alpha Company books.
Part B – Assume that at all
times during the year there were 100,000 shares of Bravo Company stock
outstanding.
Record the journal entries
for the purchase of the stock, the dividends, and the reporting of income at
year end on Alpha Company books.
State what the year-end
value of the stock investment account is on the Alpha Company books.
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