Equity Method for Stock Investment On January 4, Year 1, Ferguson Company purchased 84,000 shares of Silva Company directly from one of the founders for a price of $51 per share. Silva has 300,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $227,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $755,000 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.
Equity Method for Stock Investment On January 4, Year 1, Ferguson Company purchased 84,000 shares of Silva Company directly from one of the founders for a price of $51 per share. Silva has 300,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $227,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $755,000 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Equity Method for Stock Investment
On January 4, Year 1, Ferguson Company purchased 84,000 shares of Silva Company directly from one of the founders for a price of $51 per share.
Silva has 300,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $227,000 in total dividends to its shareholders. On December 31, Year 1, Silva reported a net income of $755,000 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.
Transcribed Image Text:Equity Method for Stock Investment
On January 4, Year 1, Ferguson Company purchased 84,000 shares of Silva Company directly from one of the founders for a price of $51 per share.
Silva has 300,000 shares outstanding, including the Daniels shares. On July 2, Year 1, Silva paid $227,000 in total dividends to its shareholders. On
December 31, Year 1, Silva reported a net income of $755,000 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
✓
Year 1, July 2
Cash
Feedback
Cash
✓
Investment in Silva Company Stock
Year 1, Dec. 31 Investment in Silva Company Stock
Income of Silva Company
✔
Check My Work
✓
✓
✓ ✓
0 0 0
b. Determine the December 31, Year 1, balance of Investment in Silva Company Stock.
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