At a total cost of $1,008,000, Herrera Corporation acquired 80,000 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 200,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. a. Journalize the entries by Herrera Corporation to record the following information:
At a total cost of $1,008,000, Herrera Corporation acquired 80,000 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 200,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. a. Journalize the entries by Herrera Corporation to record the following information:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At a total cost of $1,008,000, Herrera Corporation acquired 80,000 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 200,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation.
a. Journalize the entries by Herrera Corporation to record the following information:
Transcribed Image Text:Equity Method for Stock Investment
At a total cost of $1,008,000, Herrera Corporation acquired 80,000 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation
uses the equity method of accounting for this investment. Tran Corp. has 200,000 shares of common stock outstanding, including the shares acquired
by Herrera Corporation.
a. Journalize the entries by Herrera Corporation to record the following information:
1. Tran Corp. reports net income of $1,810,000 for the current period.
Investment in Tran Corp. Stock ✓ ✓
Income of Tran Corp.
✓
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80,000 X
2. A cash dividend of $1.70 per common share is paid by Tran Corp. during the current period.
Cash
V
Investment in Tran Corp. Stock
✓
K
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