Question

PLEASE HELP ME SOLD IT!

Assume the year 2009 is FKG Inc.'s first year of operation. FKG Inc. carries the following investments on its books on December 31, 2009, and December 31, 2010. All securities were purchased during 2009 by cash. FKG Inc. has a fiscal year end on December 31.

COMPANY	COST	FAIR VALUE, DEC. 31,2009	FAIR VALUE, DEC. 31,2010
A Company	$25,000	$13,000	$20,000
B Company	$13,000	$20,000	$20,000
C Company	$210,000	$130,000	$50,000

1. Record the initial purchase of each of these securities
2. Suppose the FKG received $1,000 cash dividends from A Company
3. Record the journal entries necessary on 12/31/2009

3. Record the journal entries necessary on 12/31/2010
4. How would these transactions appear on the Balance Sheet? On the Income Statement? On the Cash Flow Statement? Assuming no other transactions. Ignore taxes.

                                                                                                                    

Income Statement (partial):

Investment revenue (dividend)                                                                        

Unrealized holding gain (loss) on investments

Total effect om NI                

Balance Sheet (partial):

Asset:

Investments, at market value          

Stockholders’ Equity:

     Retained earnings                                                                          

                               

Cash Flow Statement (partial):

Operating Activities:

Cash dividends

Investing Activities:                                                                             

     Purchase of equity investments                                              

     Sale of equity investments           

Answer 1

Answer