Equity Method for Stock Investment On January 4, Year 1, Ferguson Company purchased 140,000 shares of Silva Company directly from one of the founders for a price of $41 per share. Silva has 400,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $343,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $1,259,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva. a. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1. Year 1, Jan. 4 Investment in Silva Company Stock 574,000 Cash 574,000 Year 1, July 2 Year 1, Dec. 31 b. Determine the December 31, Year 1, balance of Investment in Silva Company Stock. $
Equity Method for Stock Investment On January 4, Year 1, Ferguson Company purchased 140,000 shares of Silva Company directly from one of the founders for a price of $41 per share. Silva has 400,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $343,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $1,259,000 for the year. Ferguson uses the equity method in accounting for its investment in Silva. a. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1. Year 1, Jan. 4 Investment in Silva Company Stock 574,000 Cash 574,000 Year 1, July 2 Year 1, Dec. 31 b. Determine the December 31, Year 1, balance of Investment in Silva Company Stock. $
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Equity Method for Stock Investment
On January 4, Year 1, Ferguson Company purchased 140,000 shares of Silva Company directly from one of the founders for a price of $41 per share. Silva has 400,000 shares outstanding, including the
Daniels shares. On July 2, Year 1, Silva paid $343,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $1,259,000 for the year. Ferguson uses the equity
method in accounting for its investment in Silva.
a. Provide the Ferguson Company journal entries for the transactions involving its investment in Silva Company during Year 1.
Year 1, Jan. 4
Investment in Silva Company Stock
574,000
Cash
574,000
Year 1, July 2
Year 1, Dec. 31
b. Determine the December 31, Year 1, balance of Investment in Silva Company Stock.
$
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