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#2 ET Mags Manufacturing of Benicia, California acquired a 20% interest in the outstanding stock of Aluminum Alloy Industries on December 31, 2016. The purchase price for Aluminum Alloy was $1,631,250 and amounted to 181,250 shares. During 2017, Aluminum Alloy Industries paid a dividend on June 30th of $1.50 per share and another dividend of $1.75 per share on December 31, 2017. For the year ended December 31, 2017, Aluminum Alloy reported net income of $4,250,400. Its stock price on December 31, 2017 was $19.90 per share. Required Prepare all journal entries required by ET Mags for the time period starting with December 31, 2016 and through year end December 31, 2017. a. Assuming they cannot exercise significant control, and the securities are reported as available for sale. ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ b. Assuming they can exercise significant control. ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________

Accounting 104 Exam #2 #2, continued c. Under each of the methods used to account for the investment in Aluminum Alloy Industries on the previous page, what would be the amount reported on the Balance Sheet related to the investment at December 31, 2017? In addition, what would be the total income reported on the Income Statement for the year ended 2017? Cannot Exercise Significant Control Balance Sheet Income Statement ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ Can Exercise Significant Control Balance Sheet Income Statement ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________

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