Big Co. purchases shares of Little Co starting on 1/1/21. LittleCo. has 100,000 shares of stock outstanding. Relevant data shownbelow:
1/1/21: Purchased 5,000 shares at $18/share, plus $10commission.
11/1/21: Little Co. paid common dividends totaling $10,000
12/31/21: Little Co. stock trading at $20/share
4/1/22: Purchased 6,000 shares at $21/share, plus $10commission
11/1/22: Little Co. paid dividends totaling $10,000
12/31/22: Little Co stock trading at $19/share
3/1/23: Sold 1,000 shares of Little Co stock at $19.50/share,less $10 commission.
Assume Big uses FIFO to account for their investment in theseshares. Required: Prepare entries to record the precedingtransactions, and answer the following questions.
Questions: 1. What is the total cost recorded as the"investment" on 1/1/21?
2. How much of an unrealized gain or loss is reported on the2021 statement of comprehensive income ("xx,xxx gain" or "xx,xxloss")?
3. How much is received as dividends on 11/1/22?
4. What is the balance in the "investment in Little" account at12/31/22?
5. What is our TOTAL unrealized gain or loss at 12/31/22?("xx,xxx gain" or "xx,xxx loss")
6. How much of an unrealized gain or loss is reported on the2022 statement of comprehensive income ("xx,xxx gain" or "xx,xxxloss")?
7. What was the gain or loss on sale of the shares on 3/1/23("xx,xxx gain" or "xx,xxx loss")?
