nenInstructionsAt a total cost of $6,950,000, Herrera Corporation acquired 229,500 shares of Tran Corp. common stock as along-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp.has 850,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation.Required:A. Journalize the entries by Herrera Corporation on December 31 to record the following information(refer to the Chart of Accounts for exact wording of account titles):1. Tran Corp. reports net income of $974,000 for the current period.2. A cash dividend of $0.28 per common share is paid by Tran Corp. during the current period.stment?DEBIT262,980.00✓Score: 51/51CREDIT262,980.00Shaded cells have feedback.PAGE 10↑ACCOUNTING EQUATIONASSETSLIABILITIESEQUITY Instructions Chart of Accounts Journal Final QuestionFinal QuestionB. Why is the equity method appropriate for the Tran Corp. investment?Herrera's investment in Tran Corp. representsinvestment amount betweenJournal1investee is presumed to represent significant influence. The equity method isthe investor can exercise significant influence over the investee.234DATEDec. 31Dec. 31✓andCashInvestment in Tran Corp. StockIncome of Tran Corp.DESCRIPTIONShaded cells have feedback.of the outstanding shares of Tran Corp. Anof the outstanding common stock of theInvestment in Tran Corp. StockJOURNALPoints:✓✓POST. REF.when0/4DEBITInstructionsAt a total cost of $6,950,000, Herlong-term investment. Herrera Cohas 850,000 shares of common s262,980.0064,260.00Required:A. Journalize the entries by(refer to the Chart of Acco1. Tran Corp. reports net2. A cash dividend of $0.✓✓Score: 51/51CREDIT262,980.0064,260.00ASSE↑↓

Associate Company: When referring to one company in relation to another, the term "associate…

At a total cost of $6,950,000, Herrera Corporation acquired 229,500 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 850,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: A. Journalize the entries by Herrera Corporation on December 31 to record the following information (refer to the Chart of Accounts for exact wording of account titles): 1. Tran Corp. reports net income of $974,000 for the current period. 2. A cash dividend of $0.28 per common share is paid by Tran Corp. during the current period. stment? DEBIT 262,980.00 Score: 51/51 CREDIT Shaded cells have feedback. PAGE 10 ACCOUNTING EQUATION ASSETS ↑ LIABILITIES EQUITY

At a total cost of $6,950,000, Herrera Corporation acquired 229,500 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 850,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: A. Journalize the entries by Herrera Corporation on December 31 to record the following information (refer to the Chart of Accounts for exact wording of account titles): 1. Tran Corp. reports net income of $974,000 for the current period. 2. A cash dividend of $0.28 per common share is paid by Tran Corp. during the current period. stment? DEBIT 262,980.00 Score: 51/51 CREDIT Shaded cells have feedback. PAGE 10 ACCOUNTING EQUATION ASSETS ↑ LIABILITIES EQUITY

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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