On january 3, 2013, roberts company purchased 30% of the 100,000 shares of common stock of thomas corporation, paying $1,500,000. there was no goodwill or other cost allocation associated with the investment. roberts has significant influence over thomas. during 2013, thomas reported income of $300,000 and paid dividends of $100,000. on january 4, 2014, roberts sold 15,000 shares for $800,000. what is the appropriate journal entry to record the sale of the 15,000 shares?

The appropriate journal entry to record the sale of the 15,000 shares:

Dr Cash                                            800,000

Cr Investment - Thomas Corp       780,000

Cr Gain on investment disposal    20,000

(to record the investment disposal of 15,000 Thomas Corp's shares)

Explanation:

Before the disposal of the investment on Thomas, Roberts Co. should use the equity method to account for this investment because 30% of Thomas' shares which is 30,000 ( 100,000 x 30%) is possessed by Robert Co. and Robert Co. has significant influence over Thomas.

So, by the end of 2013, Robert's treatment to this investment should be:

Opening balance as of 2013:        $1,500,000

Plus: Share of net profit        :        $90,000   (calculated as 300,000 x 30%)

Minus: Dividend received     :        $(30,000) (calculated as 100,000 x 30%)

Closing balance as of 2013:          $1,560,000

=> Value per share = 1,560,000 / 30,000 = $52.

So, as at January 4 2014, because 15,000 shares is sold, the Investment account is Credited ( decreased) by $780,000 ( 52 x 15,000) and the total sales's receipt of $800,000 will generate the profit of $20,000 ( calculated as $800,000 - $780,000).  

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi

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