Better Boat Company's Alice and Zohar Walworth are pleased with the growth of their business and have decided to invest. (Click the icon to view the securities transactions.) Read the requirements.
Dec. 31: Billybo Backpacks reported net income of $50,000 for the year. Better Boat Company's share of the net income is $7.
Dec. 31: Adjusted the Aldrich stock for a market value of $4.88 per share.
Requirement 2. Determine the effect on Better Boat Company's net income for the year for each of the three investments. (En Review the journal entries prepared in Requirement 1.
Reference
Better Boat Company's Alice and Zohar Walworth are pleased with the growth of their business and have decided to invest. (Click the icon to view the securities transactions.) Read the requirements.
Reference
Date Jul. 1
Accounts and Explanations
Debit 20,000
Credit
Equity Investments Cash Purchased investment in stock Equity InvestmentsBillybo Cash
Dec. 31
Cash Interest Revenue
2,700
20,000
2,700
Jul. 7
54,000
54,000
Received cash interest.
Purchased investment in stock (equity method) Held-to-Maturity Debt Investments
Jul. 10
90,000
Dec. 31: Billybo Backpacks reported net income of $50,000 for the year. Better Boat Company's share of the net income is $7.
Date Accounts and Explanations Debit Credit Dec.31 Equity InvestmentsBillybo 7,500 Revenue from Investments 7,500
Cash
90,000
Purchased investment in bonds.
Sep. 30
Cash Dividend Revenue Received cash dividend Cash Equity InvestmentsBillybo Received cash dividend (equity method) Cash Interest Revenue
2,000
2,000
Nov. 1
32,400
Recorded revenue earned from investment.
32,400
Dec. 31: Adjusted the Aldrich stock for a market value of $4.88 per share
Debit Credit 480 480
Dec. 31
2,700
Date Accounts and Explanations Dec.31 Unrealized Holding LossEquity Investments Fair Value AdjustmentEquity Investments
2,700
Received cash interest Equity InvestmentsBillybo Revenue from Investments Recorded revenue earned from investment Unrealized Holding LossEquity Investments
Dec. 31
7,500
7,500
Adjusted investment to market value.
Dec. 31
480
Fair Value AdjustmentEquity Investments Adjusted investment to market value
480
Review the journal entries prepared in Requirement 1 Net increase (decrease) in Investment Better Boats 2025 income Aldrich Billybo Crumble
Print
Done