a. At what amount will the investee's Stockholders' Equity be reported after income and dividends have been closed to Retained Earnings (assume no other changes to Stockholders' Equity)? $0 b. Provide the following journal entries: 1. Record the recognition of Equity Income by the investor. 2. Record the receipt of the $180 dividend. (to record equity income.) (to record the receipt of dividends.) Debit 0 0 0 0 Credit 0 0 0 0 c. At what amount is the Equity Investment reported on the investor's balance sheet? 50
a. At what amount will the investee's Stockholders' Equity be reported after income and dividends have been closed to Retained Earnings (assume no other changes to Stockholders' Equity)? $0 b. Provide the following journal entries: 1. Record the recognition of Equity Income by the investor. 2. Record the receipt of the $180 dividend. (to record equity income.) (to record the receipt of dividends.) Debit 0 0 0 0 Credit 0 0 0 0 c. At what amount is the Equity Investment reported on the investor's balance sheet? 50
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:a. At what amount will the investee's Stockholders' Equity be reported after income and dividends have been closed to Retained Earnings (assume no other changes to Stockholders'
Equity)?
$0
b. Provide the following journal entries:
1. Record the recognition of Equity Income by the investor.
2. Record the receipt of the $180 dividend.
(to record equity income.)
(to record the receipt of dividends.)
Debit
0
0
0
0
Credit
0
0
0
0
c. At what amount is the Equity Investment reported on the investor's balance sheet?
50
Transcribed Image Text:Accounting for Equity Investments (Basic)
Assume an investor purchases all of the stock of the investee (and, thus, its business) in a stock purchase for $3,000. The reported book values of the investee's net assets equal their
fair values. The investee's balance sheet on the date of purchase is as follows:
$300
Accounts receivable $300 Mortgage payable
Inventories
600
Building
2400 Stockholders' equity
3000
Total assets
$3.300 Total liabilities and equity $3,300
Now, assume, subsequent to the purchase, the investee reports net income of $600 and pays $180 in dividends to the investor.
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