Question

(b) Assume that the stock acquired by Ball represents 30% of Leftwich's voting stock and that Ball accounts for this investment using the equity method since it is able to exert significant influence. Use the financial statement effects template (with amounts and accounts) to record the following transactions: (1) Ball purchased 10,000 common shares of Leftwich at $15 cash per share. (2) Leftwich reported annual net income of $40,000. (3) Ball received a cash dividend of $1.20 per common share from Leftwich. (4) Year-end market price of Leftwich common stock is $19 per share. Use negative signs with answers, when appropriate. Balance Sheet Income Statement Net Noncash Assets Contributed Capital Earned Capital Transaction Cash Asset + = Liabilities + + Revenue - Expenses = Income (1) (2) ♡ E

Answer 1

Ans: B) Balance Sheet Income Statement Transaction Workings Contributed Capital Transaction Cash Assets Non-Cash Assets Liabilities Earned Capital Revenues Expenses Net Income 10,000 $15 $12,000 Non-Cash assets $40,000*30% 10,000 S1.2 $olCash assets -$150,000 S0 1 $150,000 $0 $12,000 S0= S12,000 -$12,000 SO= 2 $12,000 $olCash assets $12,000 S0+ 3 $0 $0 S0= S이+ S이+ $0 $o Cash assets 4 SO