Valix Finacc vol 1 Problem 10-13

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 10-13

2008

Aug. 1    Investment in equity securities                                             60,000

                       Cash                                                                                                    60,000

Oct.  1    Investment in equity securities                                           560,000

                       Cash                                                                                                  560,000

2009

July   1    Investment in equity securities                                           480,000

                       Cash                                                                                                  480,000

Aug. 1    Cash                                                                                   500,000

                       Investment in equity securities                                                           340,000

                       Gain on sale of investment                                                               160,000

                Lot 1 (1,000 shares)                                                                                     60,000

                Lot 2 (4,000/8,000 x 560,000)                                                                      280,000

                Cost of investment sold                                                                           340,000

2010

Feb.  1    Received 5,000 shares representing 50% stock dividend on

                10,000 remaining shares held.  Shares now held, 15,000.

Nov. 1    Stock rights                                                                                      95,000

                       Investment in equity securities                                                             95,000

               Lot 2 – 6,000 rights (10/80 x 280,000)                                                            35,000

               Lot 3 – 9,000 rights (10/80 x 480,000)                                                            60,000

               Cost of rights received                                                                                95,000

                                                                                                            135

2010

Dec. 1    Cash (15,000 x 10)                                                               150,000

                       Stock rights                                                                                          95,000

                       Gain on sale of stock rights                                                                 55,000

Summary of investments                                                                   Shares               Cost

Lot 2 (280,000 – 35,000)                                                                         6,000            245,000

Lot 3 (480,000 – 60,000)                                                                         9,000            420,000

Total                                                                                                            15,000            665,000