Listed below are a few events and transactions of Kodax Comp

Listed below are a few events and transactions of Kodax Company.

2017

2018

Prepare journal entries to record the above transactions and events of Kodax Company. (Do not round intermediate calculations and round your final answers to the nearest dollar amount.)
Journal entry worksheet

Purchased 24,960 shares of Grecco Co. common stock for $409,000 cash plus a broker’s fee of $3,100 cash. Grecco has 96,000 shares of common stock outstanding, and its policies will be significantly influenced by Kodax.

Grecco declared and paid a cash dividend of $1.60 per share.

Note: Enter debits before credits.

Grecco announced that net income for the year is $488,400.

Grecco declared and paid a cash dividend of $2.20 per share.

Grecco announced that net income for the year is $702,900.

Kodax sold 8,000 shares of Grecco for $325,000 cash.

Jan.		2		Purchased 24,960 shares of Grecco Co. common stock for $409,000 cash plus a broker’s fee of $3,100 cash. Grecco has 96,000 shares of common stock outstanding, and its policies will be significantly influenced by Kodax.
Sept.		1		Grecco declared and paid a cash dividend of $1.60 per share.
Dec.		31		Grecco announced that net income for the year is $488,400.

Solution

Journal entries Date Accounting titles & Explanations Debit Credit 2017 2-Jan long term investment-Grecco 412100 cash 412,100 (409000+3,100) 1-Sep Cash long term investment-Grecco 39936 (24960*1.6) 39,936 31-Dec long term investment-Grecco 126984 Earnings from long term investment 126,984 ((488400/96000)*24960 2018 Cash 54912 long term investment-Grecco 54,912 (24960*2.2) long term investment-Grecco 182754 Earnings from long term investment 182754 ((702900/96000)*24960 Cash 325,000 long term investment-grecco 200,958 gain on sale of investment 124,042 Record sale of investment original cost 412,100 less 2017 dividends 39,936 add 2017 earnings 126984 less 2018 dividends 54912 add 2018 earnings 182754 book value at date of sale 626,990 Book value of share sold 626990/24960*8000 200958.3