Valix Finacc vol 1 Problem 10-9

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 10-9

1. Investment in equity securities                                                      1,800,000

            Cash                                                                                                           1,800,000

2. 10,000 rights

3. Cost of rights (10/200 x 1,800,000)                                                                           90,000

4. Stock rights                                                                                       90,000

            Investment in equity securities                                                                        90,000

5. Investment in equity securities                                                        390,000

            Cash (10,000/5 = 2,000 x 150)                                                                         300,000

            Stock rights                                                                                                     90,000

6. Cash (10,000 x 10)                                                                           100,000

         Stock rights                                                                                                        90,000

         Gain on sale of rights                                                                                        10,000

7. Loss on stock rights                                                                           90,000

         Stock rights                                                                                                        90,000