Question details

Principles of Financial Accting
$ 10.00

#1: Equity and Cost Methods in Accounting Using QuickBooks™ to Record the Transactions

 

Register for QuickBooks Online Simple Start 2015: https://qbo.intuit.com For PC and Mac.



You may have to start with a free trial with a credit card and cancel directly after this module submission.



Once QuickBooks™ is loaded, you may have to reboot your computer.

  1. Setting up company:

Go to Home page, select the widget to the direct top right of the word ‘help’ and select on the left side ‘settings’, then company setting.

For each edit, hit the pen picture on the right hand side of each section. Enter the company name, Shea Corporation. Enter information as indicated below:

Company address: c/o CSU- Global; 7800 Orchard Road- Suite 200

City:  Greenwood Village, CO 80111

State: CO

ZIP code: 80111

Phone Number: 999.999.9999

Choose Accrual Basis

Go to advanced setting and be sure everything is turned on except the accounting setting for the closing of the books

X out of this screen, which returns you to the home page

TIPS:

  1. In the home page, go to the top right hand corner, to the right of the name of the company, click the gear symbol, which is the main link for everything you need for changes.
  2. From 2014 to end of 2015, all account names have the words “using the cost method” in them. From 2016 to 2017, all account names have the words “using the equity method” in them.
  3. For doing the journal entries below: Go to top panel, in the middle of the top of the screen, where there is a plus sign (+) and select journal entries found in the other section.
  4. It is up to you to create the correct accounts, with the proper journal entries

Important to remember:

  •  
    • Do not forget to click on ‘save and new’ after you input and file.
    • Backup your company information many times as you work. To do this, click the button at the bottom of each screen called: save and new
    • Always check to be sure your input dates are correct. Transaction input date are on the top left side above the journal entry
    • Always best to record terms within the journal entry in the extra line provided to the right of A/R or A/P

2. Prepare journal entries. Be sure all dates agree with the problem and are not today’s date

Cost method

Year 2014

 

Jan 1

Investor corporations purchased 8,000 shares (20% of investee company’s outstanding stock) 

at a cost of $ 150,000.

May 31

Investee company declared and paid a cash dividends of $1.50 per share

Dec 31

Investee company announced that its net income for the year was $100,000

Cost method

Year 2015

 

Oct 1

Investee company declared and paid a cash dividend of $1.00 per share

Dec 21

 Investee company announced its net income for the year in the amount of $ 80,000

Dec 31

Investor corporation sold all of its shares on investee company for $ 178,000 cash

 

Equity method

Year 2016

 

Jan 1

Investor corporations purchased 8,000 shares (20% of investee company’s outstanding stock) 

at a cost of $ 150,000.

May 31

Investee company declared and paid a cash dividends of $1.50 per share

Dec 31

Investee company announced that its net income for the year was $100,000

 

Year 2017

 

Oct 1

Investee company declared and paid a cash dividend of $1.00 per share

Dec 21

 Investee company announced its net income for the year in the amount of $ 80,000

Dec 31

Investor corporation sold all of its shares on investee company for $ 178,000 cash

 

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