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Theater Arts Company

Theater Arts Company produces and sells theater costumes. The following transactions relate to certain securities acquired by Theater Arts Company, which has a fiscal year ending on December 31:

2004

Feb 10 Purchased 4,000 shares of the 150,000 outstanding common shares of Haslam Corporation at 48 plus commission and other costs of $168.

June 15 Received the regular cash dividend of $0.70 a share on Haslam Corporation stock.

Dec 15 Received the regular cash dividend of $0.70 a share plus an extra dividend of $0.05 a share on Haslam Corporation stock.

(Assume that all intervening transactions have been recorded properly and the number of shares of stock owned have not changed from December31, 2004, to December 31, 2006)

2007

Jan 3 Purchased controlling interest in Jacob Inc. for $1,250,000 by purchasing 40,000 shares directly from the estate of the founder of jacob. There are 100,000 shares of Jacob Inc. stock outstanding.

Apr 1 Received the regular cash dividend of $0.70 a share and a 2% stock dividend on the Haslam Corporation stock.

Jul 20 Sold 1,000 shares of Haslam Corporation stock at 41. The broker deducted commission and other costs of $50 remitting the balance.

Dec15. Received a cash dividend at a new rate of $0.80 a share on the Haslam Corporation stock.

31. Received $40,000 of cash dividends on Jacob Inc. stock. Jacob Inc. reported net income of $295,000 in 2007. Theater Arts uses the equity method of accounting for its investment in Jacob Inc.

Instructions: Journalize the entries for the preceding transactions

Solution Preview

Instructions: Journalize the entries for the preceding transactions

Theater Arts Company produces and sells theater costumes. The following transactions relate to certain securities acquired by Theater Arts Company, which has a fiscal year ending on December 31:

2004

Feb 10 Purchased 4,000 shares of the 150,000 outstanding common shares of Haslam Corporation at 48 plus commission and other costs of $168.

Feb. 10 Investment in stock 192,168
Cash 192,168
(4,000 shares x $48 = $192,000 + $168 = $192,168)

The investment in short-term investment will be recorded at all costs.

June 15 Received the regular cash dividend of $0.70 a share on Haslam Corporation stock.

June 15 Cash 2,800
Dividend ...

Solution Summary

This solution is comprised of a detailed explanation to answer the request of the assignment of more than 400 words of text.

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