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Exercise 12-7 (Part Level Submission)

On January 1, Vince Corporation purchased a 25% equity in Morelli Corporation for $180,000. At December 31, Morelli declared and paid a $60,000 cash dividend and reported net income of $200,000.

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(a)

Journalize the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1

Dec. 31

	(To record dividends received)
Dec. 31

	(To record equity in Morelli Corporation's net income)
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Exercise 12-8

Presented below are two independent situations.

1.		Chicory Cosmetics acquired 15% of the 200,000 shares of common stock of Racine Fashion at a total cost of $13 per share on March 18, 2014. On June 30, Racine declared and paid a $60,000 dividend. On December 31, Racine reported net income of $122,000 for the year. At December 31, the market price of Racine Fashion was $15 per share. The stock is classified as non-trading.
2.		Frank, Inc., obtained significant influence over Nowak Corporation by buying 30% of Nowak’s 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2014. On June 15, Nowak declared and paid a cash dividend of $30,000. On December 31, Nowak reported a net income of $80,000 for the year.

Prepare all the necessary journal entries for 2014 for (a) Chicory Cosmetics and (b) Frank, Inc. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Date	Account Titles and Explanation	Debit	Credit
1.	Mar. 18

	June 30

	Dec. 31

2.	Jan. 1

	June 15

	Dec. 31

Exercise 12-12

Zippydah Company has the following data at December 31, 2014.

Securities	Cost	Fair Value
Trading	$120,000	$124,000
Non-trading	100,000	94,000

The non-trading securities are held as a long-term investment. (a) Prepare the adjusting entries to report 1. Trading securities at fair value and 2. Non-trading securities at fair value. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
1

2

(b) Indicate the statement presentation of each class of securities.

Zippydah Company Balance Sheet December 31, 2014

			$



:			$

Indicate the related unrealized gain (loss) accounts.

Zippydah Company Income Statement (Detailed) For the year ended December 31, 2014

			$

Problem 12-2A (Part Level Submission)

In January 2014, the management of Stefan Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the following transactions occurred.

Feb. 1		Purchased 600 shares of Superior common stock for $31,800, plus brokerage fees of $600.
Mar. 1		Purchased 800 shares of Pawlik common stock for $20,000, plus brokerage fees of $400.
Apr. 1		Purchased 50 $1,000, 7% Venice bonds for $50,000, plus $1,000 brokerage fees. Interest is payable semiannually on April 1 and October 1.
July 1		Received a cash dividend of $0.60 per share on the Superior common stock.
Aug. 1		Sold 200 shares of Superior common stock at $58 per share less brokerage fees of $200.
Sept. 1		Received a $1 per share cash dividend on the Pawlik common stock.
Oct. 1		Received the semiannual interest on the Venice bonds.
Oct. 1		Sold the Venice bonds for $50,000 less $1,000 brokerage fees.

At December 31, the fair value of the Superior common stock was $55 per share. The fair value of the Pawlik common stock was $24 per share.

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(a)

Journalize the transactions and post to the accounts Debt Investments and Stock Investments. (Use the T-account form.) (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Feb. 1

Mar. 1

Apr. 1

July 1

Aug. 1


Sept. 1

Oct. 1

Oct. 1

Stock Investments



Debt Investments


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Problem 12-6A

The following data, presented in alphabetical order, are taken from the records of Radar Corporation.

Accounts payable		$240,000
Accounts receivable		140,000
Accumulated depreciation—buildings		180,000
Accumulated depreciation—equipment		52,000
Allowance for doubtful accounts		6,000
Bonds payable (10%, due 2020)		500,000
Buildings		950,000
Cash		42,000
Common stock ($10 par value; 500,000 shares authorized, 150,000 shares issued)		1,500,000
Dividends payable		80,000
Equipment		275,000
Fair value adjustment—non-trading securities (Dr)		8,000
Goodwill		200,000
Income taxes payable		120,000
Inventory		170,000
Investment in Mara common stock (30% ownership), at equity		380,000
Investment in Sasse common stock (10% ownership), at cost		278,000
Land		390,000
Notes payable (due 2015)		70,000
Paid-in capital in excess of par—common stock		130,000
Premium on bonds payable		40,000
Prepaid insurance		16,000
Retained earnings		103,000
Short-term investment, at fair value (and cost)		180,000
Unrealized gain—non-trading securities		8,000

The investment in Sasse common stock is considered to be a long-term non-trading security. Prepare a classified balance sheet at December 31, 2014. (List assets in order of liquidity. Property, plant and equipment list in order of land, buildings and equipment.)

RADAR CORPORATION Balance Sheet December 31, 2014
Assets

			$

		$
:









	$
:

:



			$
Liabilities and Stockholders' Equity

			$



			$

		$
:









:

			$