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:

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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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:
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.
✓
Feedback
Check My Work
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
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. ✓ Feedback Check My Work 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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