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    Audit 2, AUDIT - OF - INVESTMENT - Problem - 2

    Uploaded by

    Shaz Naga
    The document summarizes the investment transactions of Hart Corp for its holdings in Rubia Inc. and Romaguera Inc. stocks in 2017. It shows the purchases and sales of shares for each company along with related gains and losses. For Rubia Inc., the total gain on sale of shares was $165,000. For Romaguera Inc., the total gain on sale of shares was $990,000. The unrealized holding gain reported in Hart's 2017 income statement is $1,310,000. Hart should report its total investment of $6,000,000 on its 2017 balance sheet.

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    Audit 2, AUDIT - OF - INVESTMENT - Problem - 2

    Uploaded by

    Shaz Naga
    41 views2 pages
    The document summarizes the investment transactions of Hart Corp for its holdings in Rubia Inc. and Romaguera Inc. stocks in 2017. It shows the purchases and sales of shares for each company along with related gains and losses. For Rubia Inc., the total gain on sale of shares was $165,000. For Romaguera Inc., the total gain on sale of shares was $990,000. The unrealized holding gain reported in Hart's 2017 income statement is $1,310,000. Hart should report its total investment of $6,000,000 on its 2017 balance sheet.

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    Audit 2, AUDIT_OF_INVESTMENT___Problem_2.docx

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    The document summarizes the investment transactions of Hart Corp for its holdings in Rubia Inc. and Romaguera Inc. stocks in 2017. It shows the purchases and sales of shares for each company along with related gains and losses. For Rubia Inc., the total gain on sale of shares was $165,000. For Romaguera Inc., the total gain on sale of shares was $990,000. The unrealized holding gain reported in Hart's 2017 income statement is $1,310,000. Hart should report its total investment of $6,000,000 on its 2017 balance sheet.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    41 views2 pages

    Audit 2, AUDIT - OF - INVESTMENT - Problem - 2

    Uploaded by

    Shaz Naga
    The document summarizes the investment transactions of Hart Corp for its holdings in Rubia Inc. and Romaguera Inc. stocks in 2017. It shows the purchases and sales of shares for each company along with related gains and losses. For Rubia Inc., the total gain on sale of shares was $165,000. For Romaguera Inc., the total gain on sale of shares was $990,000. The unrealized holding gain reported in Hart's 2017 income statement is $1,310,000. Hart should report its total investment of $6,000,000 on its 2017 balance sheet.

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    © All Rights Reserved
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    of 2

    AUDIT OF INVESTMENT

    Problem 2
    The following subsidiary ledger show the Investment at Fair Value Through Profit or Loss of
    HART CORP. for the year 2017:
    RUBIA INC.
    Date Particulars Debit Credit
    June 2 Purchase of 2,000 shares P570,000
    10 Adjusted to market value; credit to retained
    earnings 30,000
    July 15 Sold 1,000 shares at P450 P450,000
    Aug. 20 Received 50% share dividends (debited at
    par value); credit to dividend income 150,000
    Sept. 15 Stocks were split 2 for 1; credit to
    investment income 450,000
    Oct. 11 Sold 1,000 shares at P150 150,000

    2,000 570,000
    (1,000) (285,000) NDP – 450,000
    1,000 + 500 285,000 CV - 285,000
    X 2/1 ______ Gain – 165,000
    3,000 285,000
    (1,000) (95,000) NDP 150,000
    2,000 190,000 CV - 95,000
    Gain 55,000

    ROMAGUERA INC.
    Date Particulars Debit Credit
    Feb. 2 Purchase 20,000 shares P3,000,000
    28 Cash dividend to share of record February
    15, declared January 15 90,000
    June 1 Sold 20,000 shares at P195 3,900,000
    Aug. 5 Purchased 50,000 shares 7,500,000
    Nov. 20 Cash received from sale of 20,000 shares
    after a November 1 declaration of P15 cash
    dividend per share to shareholders of record
    as of December 31 3,700,000
    Dec. 15 Cash dividends received 450,000

    Rubia Inc. shares and Romaguera Inc. shares were selling at P150 and P190, respectively, as
    of December 31, 2017.

    20,000 2,910,000
    (20,000) (2,910,000) NDP 3,900,000
    50,000 7,500,000 CV 2,910,000
    (20,000) (3,000,000) Gain 990,000
    30,000 4,500,000
    NDP (3,700,000 – 300,000) – 3,400,000
    CV - 3,000,000
    Gain - 400,000

    Rubia – 2,000 x 150 = 300,000


    Rom – 30,000 x 190 = 5,700,000
    Total fmv = 6,000,000 vs 4,690,000 = UHG 1,310,000

    This study source was downloaded by 100000790709902 from CourseHero.com on 04-25-2023 03:17:01 GMT -05:00

    https://www.coursehero.com/file/34606717/AUDIT-OF-INVESTMENT-Problem-2docx/
    Questions:
    1. What is the total gain on sale of Rubia Inc. shares?
    a. 165,000 b. 205,000 c. 220,000 d. 245,000

    2. What is the total gain on sale of Romaguera Inc. shares?


    a. 1,300,000 b. 1,600,000 c. 1,390,000 d. 1,690,000

    3. What is the unrealized holding gain or loss to be reported in the Hart’s 2017 Income
    Statement?
    a. 0 b. 1,660,000 c. 1,210,000 d. 1,310,000

    4. At what amount should Hart report its investment in its 2017 Balance Sheet?
    a. 5,812,500 b. 5,850,000 c. 6,150,000 d. 6,000,000

    This study source was downloaded by 100000790709902 from CourseHero.com on 04-25-2023 03:17:01 GMT -05:00

    https://www.coursehero.com/file/34606717/AUDIT-OF-INVESTMENT-Problem-2docx/
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