Asked by Melissa Wilkerson on Jun 17, 2024
Verified
Required:
Prepare dated journal entries for Ocean Enterprises for 2020 to account for its investment in Zebrafish and any related income therefrom.
At January 1, 2019-purchase of 15%$150,000 LO19 revaluation 15,000‾ Balance-Dec. 31,2019(15%)$165,000 Additional purchase (10%)-January 1, 2020 110,00‾ Balance (25%) $275,000 July 1, 2020-Sale of 12,500shares 137,500‾ Balance (12.5%)137,5002020 revaluation (12,500×$12.50)−137,50018,750 Investment account balance-Dec. 31,2020$156,250\begin{array}{|l|r|}\hline \text { At January 1, 2019-purchase of } 15 \% & \$ 150,000 \\\hline \text { LO19 revaluation } & \underline{15,000} \\\hline \text { Balance-Dec. } 31,2019(15 \%) & \$ 165,000 \\\hline \text { Additional purchase (10\%)-January 1, 2020 } & \underline{110,00} \\\hline \text { Balance (25\%) } & \$ 275,000 \\\hline \text { July 1, 2020-Sale of 12,500shares } & \underline{137,500} \\\hline \text { Balance }(12.5 \%) & 137,500 \\\hline 2020 \text { revaluation }(12,500 \times \$ 12.50)-137,500 & 18,750 \\\hline \text { Investment account balance-Dec. } 31,2020 & \$ 156,250 \\\hline\end{array} At January 1, 2019-purchase of 15% LO19 revaluation Balance-Dec. 31,2019(15%) Additional purchase (10%)-January 1, 2020 Balance (25%) July 1, 2020-Sale of 12,500shares Balance (12.5%)2020 revaluation (12,500×$12.50)−137,500 Investment account balance-Dec. 31,2020$150,00015,000$165,000110,00$275,000137,500137,50018,750$156,250
Investment Account
A financial account held at a financial institution that contains securities, cash, and other assets managed for the purpose of achieving an investment goal.
Related Income
Income generated from transactions or relationships between affiliated entities or parties.
Revaluation
The process of adjusting the exchange rate of a currency or the value of assets and liabilities to reflect their true value.
- Evaluate and construct ledger records for investment-related transactions, such as buying, revaluing, and selling activities.
- Cultivate the skill to appraise and alter investment holdings in light of shifting investment ratios and fair value estimations.
- Recognize the critical role of accurate record-keeping and reporting in investment transactions to uphold the accuracy of financial statements.
Verified Answer
MA
Muhamad AzamuddinJun 21, 2024
Final Answer :
Tanuary 1, 2020 Investment in Zebrafish $110,000 Cash $110,000 (To record second purchase of shares in Zebrafish) June 30,2020 Cash $15,000 Dividend income $15,000 (To record receipt of dividend at June 30,2020) July 1,2020 Cash $150,000 Investment in Zebrafish $137,500 Gain on sale of shares (FVTPL) 12,500 To record sale of 12,500 shares for $12 per share) Dec 31,2020 Cash $4,500 Dividend income $4,500 (To record receipt of Dec 31, 2020 dividend) Investment in Zebrafish $18,750 Investment revaluation gain $18,750 (To revalue shares to $12.50 per share) \begin{array}{|l|l|l|l|}\hline \begin{array}{l}\text { Tanuary 1, } \\2020\end{array} & \text { Investment in Zebrafish } & \$ 110,000 & \\\hline & \text { Cash } & & \$ 110,000 \\\hline& \text { (To record second purchase of shares in Zebrafish) } & & \\\hline \text { June 30,2020 } & \text { Cash } & \$ 15,000 & \\\hline & \text { Dividend income } & & \$ 15,000 \\\hline & \text { (To record receipt of dividend at June 30,2020) } & & \\\hline \text { July } 1,2020 & \text { Cash } & \$ 150,000 & \\\hline & \text { Investment in Zebrafish } & & \$ 137,500 \\\hline & \text { Gain on sale of shares (FVTPL) } & & 12,500 \\\hline & \text { To record sale of } 12,500 \text { shares for } \$ 12 \text { per share) } & & \\\hline \text { Dec } 31,2020 & \text { Cash } & \$ 4,500 & \\\hline & \text { Dividend income } & & \$ 4,500 \\\hline & \text { (To record receipt of Dec 31, 2020 dividend) } & \\\hline & \text { Investment in Zebrafish } & \$ 18,750 \\\hline &\text { Investment revaluation gain } & & \$ 18,750 \\\hline &\text { (To revalue shares to } \$ 12.50 \text { per share) } & &\\\hline\end{array} Tanuary 1, 2020 June 30,2020 July 1,2020 Dec 31,2020 Investment in Zebrafish Cash (To record second purchase of shares in Zebrafish) Cash Dividend income (To record receipt of dividend at June 30,2020) Cash Investment in Zebrafish Gain on sale of shares (FVTPL) To record sale of 12,500 shares for $12 per share) Cash Dividend income (To record receipt of Dec 31, 2020 dividend) Investment in Zebrafish Investment revaluation gain (To revalue shares to $12.50 per share) $110,000$15,000$150,000$4,500$18,750$110,000$15,000$137,50012,500$4,500$18,750
Learning Objectives
- Evaluate and construct ledger records for investment-related transactions, such as buying, revaluing, and selling activities.
- Cultivate the skill to appraise and alter investment holdings in light of shifting investment ratios and fair value estimations.
- Recognize the critical role of accurate record-keeping and reporting in investment transactions to uphold the accuracy of financial statements.