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Student Name: Instructor Class: McGraw-Hill/Irwin Problem 12-07 AMALGAMATED GENERAL CORPORATION General Journal ($ in millions) Account 2011

October 18 Investment in Millwork Ventures preferred shares Cash October 31 Cash Investment revenue November 1 Investment in Holistic Entertainment bonds Cash November 1 Cash Loss on sale of investments Investment in Kansas Abstractors bonds December 1 Investment in Household Plastics bonds Cash December 20 Investment in U.S. Treasury bonds Cash December 21 Investment in NXS common shares Cash December 23 Cash Investment in U.S. Treasury bonds Gain on sale of investments December 29 Cash Investment revenue Debit Credit

58 58 1.5 1.5 18 18 28 2 30 60 60 5.6 5.6 44 44 5.7 5.6 0.1 3 3


- Correct! - Correct! - Correct! - Correct! - Correct! - Correct! - Correct! - Correct! - Correct!

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 12-07 AMALGAMATED GENERAL CORPORATION General Journal ($ in millions) Account December 31 Accrued interest: Investment revenue receivable - Holistic Entertainment Investment revenue receivable - Household Plastics Investment revenue Revaluations: Net unrealized holding gains and losses-OCI Fair value adjustment Fair value adjustment Net unrealized holding gains and losses-I/S Closing entry: Net unrealized holding gains and losses-I/S(NXS) Investment revenue Gain on sale of investments (U.S. Treasury bonds) Loss on sale of investments (Kansas Abstractors) Income summary (to balance) 2012 January 7 Cash Loss on sale of investments (to balance) Investment in NXS common shares (account balance) December 31 Net unrealized holding gains and losses-I/S Fair value adjustment Debit Credit

0.3 0.6 0.9 3 3 2 2 2.0 5.4 0.1 2.0 5.5


- Correct! - Correct! - Correct! - Correct!

43 1 44
- Correct!

2.0 2.0
- Correct!

Given Data P12-07: AMALGAMATED GENERAL CORPORATION Securities (bonds) held 10/1 (Kansas Abstractors, Inc.) Interest rate on bonds (Kansas Abstractors, Inc.) Additional information: 2011 Oct. 18 Number of preferred shares purchased (Millwork Ventures Company) Cost of preferred shares purchased (Millwork Ventures Company) 31 Semi-annual interest received (Kansas Abstractors, Inc.) Nov. 1 Bonds purchased (Holistic Entertainment Enterprises) Interest rate of bonds purchased (Holistic Entertainment Enterprises) 1 Sold bonds (Kansas Abstractors, Inc.) Dec. 1 Bonds purchased (Household Plastics Corporation) Interest rate of bonds purchased (Household Plastics Corporation) 20 U.S. Treasury bonds purchased 21 Number of common shares purchased (NXS Corporation) Cost of common shares purchased (NXS Corporation) 23 U. S. Treasury bonds sold 29 Dividend received from preferred shares (Millwork Ventures Company) 31 Market price per share for preferred stock (Millwork Ventures Company) Market price per share (NXS Corporation) Fair value of bonds (Household Plastics Corporation) Fair value of bonds (Holistic Entertainment Enterprises) 2012 Jan. 7 Sold common shares (NXS Corporation) $ 30,000,000 10%

2,000,000 $ 58,000,000 $ 1,500,000 $ 18,000,000 10% $ 28,000,000 $ 60,000,000 12% $ 5,600,000 4,000,000 $ 44,000,000 $ 5,700,000 $ 3,000,000 $ 27.50 $ 11.50 $ 58,700,000 $ 16,700,000 $ 43,000,000

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 12-09 RUNYAN BAKERY General Journal ($ in millions) Requirement 1: Account Purchase Investment in Lavery Labeling shares Cash Net income Investment in Lavery Labeling shares Investment revenue Dividends Cash Investment in Lavery Labeling shares Depreciation adjustment Investment revenue Investment in Lavery Labeling shares

Debit 324

Credit

324 48 48 20 20 4 4

- Correct!

- Correct!

- Correct!

- Correct!

Requirement 2: Account Purchase Investment in Lavery Labeling shares Cash Dividends Cash Investment revenue Adjusting entry Net unrealized holding gains and losses-OCI Fair value adjustment

Debit 324

Credit

324 20 20 14 14

- Correct!

- Correct!

- Correct!

Given Data P12-09: RUNYAN BAKERY Additional information re: Lavery Labeling stock purchase: Percentage of outstanding common shares bought Purchase amount Number of shares purchased Dividend paid on 12/15/2011 Market value of common stock at 12/31/2011 Fair market book value of assets Assets - fair value over book value Useful life of plant facilities Lavery net income, 2011

$ $ $ $ $ $

30% 324,000,000 10,000,000 2 per share 31 per share 800,000,000 80,000,000 6 years 160,000,000

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 12-12 NORTHWEST PAPERBOARD COMPANY General Journal ($ in millions) Requirement 1: Account Purchase Investment in Vancouver T&M shares Cash Net income Investment in Vancouver T&M shares Investment revenue Dividends Cash Investment in Vancouver T&M shares Inventory Investment revenue Investment in Vancouver T&M shares Depreciation Investment revenue Investment in Vancouver T&M shares

Debit 400.0

Credit

400.0 56.0 56.0 12.0 12.0 2.0 2.0 0.5 0.5

- Correct!

- Correct!

- Correct!

- Correct!

- Correct!

Requirement 2: Investment Revenue ($ in millions) Explanation Share of income Inventory Depreciation Requirement 3: Investment in Vancouver T&M shares ($ in millions) Explanation Cost Share of income Dividends Inventory Depreciation Debit 400.0 56.0 Credit Balance 400.0 456.0 444.0 442.0 441.5
Correct!

Debit 2.0 0.5

Credit 56.0

Balance 56.0 54.0 53.5


Correct!

12.0 2.0 0.5

Requirement 4: $400 million cash outflow from investing activities. $12 million cash inflow (dividends) among operating activities.

Given Data P12-12: NORTHWEST PAPERBOARD COMPANY Percentage of outstanding common shares bought Purchase amount Book value of net assets Inventory - fair value over book value Plant - fair value over book value Useful life of plant facilities Net income, 2011 Cash dividend paid 40% $ 400,000,000 $ 775,000,000 $ 5,000,000 $ 20,000,000 16 years $ 140,000,000 $ 30,000,000